Correlation Between HUMANA and Cambria Shareholder

Can any of the company-specific risk be diversified away by investing in both HUMANA and Cambria Shareholder at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HUMANA and Cambria Shareholder into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HUMANA INC and Cambria Shareholder Yield, you can compare the effects of market volatilities on HUMANA and Cambria Shareholder and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HUMANA with a short position of Cambria Shareholder. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Cambria Shareholder.

Diversification Opportunities for HUMANA and Cambria Shareholder

-0.43

Correlation Coefficient

HUMANA  Cambria Shareholder

Very good diversification

The 3 months correlation between HUMANA and Cambria is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Cambria Shareholder Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Shareholder Yield and HUMANA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HUMANA INC are associated (or correlated) with Cambria Shareholder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Shareholder Yield has no effect on the direction of HUMANA i.e., HUMANA and Cambria Shareholder go up and down completely randomly.

Pair Corralation between HUMANA and Cambria Shareholder

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Cambria Shareholder. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 1.18 times less risky than Cambria Shareholder. The bond trades about -0.19 of its potential returns per unit of risk. The Cambria Shareholder Yield is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,989  in Cambria Shareholder Yield on September 14, 2024 and sell it today you would earn a total of  240.00  from holding Cambria Shareholder Yield or generate 3.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

HUMANA INC  vs.  Cambria Shareholder Yield

HUMANA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

Cambria Shareholder Yield

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Shareholder Yield are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Cambria Shareholder is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HUMANA and Cambria Shareholder

The main advantage of trading using opposite HUMANA and Cambria Shareholder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Cambria Shareholder can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cambria Shareholder will offset losses from the drop in Cambria Shareholder's long position.

The idea behind HUMANA INC and Cambria Shareholder Yield pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.