Correlation Between HUMANA and Timothy Plan

Can any of the company-specific risk be diversified away by investing in both HUMANA and Timothy Plan 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 Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HUMANA INC and Timothy Plan , you can compare the effects of market volatilities on HUMANA and Timothy Plan 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 Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Timothy Plan.

Diversification Opportunities for HUMANA and Timothy Plan

0.43

Correlation Coefficient

HUMANA  Timothy Plan

Very weak diversification

The 3 months correlation between HUMANA and Timothy is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Timothy Plan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan 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 Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan has no effect on the direction of HUMANA i.e., HUMANA and Timothy Plan go up and down completely randomly.

Pair Corralation between HUMANA and Timothy Plan

Assuming the 90 days trading horizon HUMANA is expected to generate 1.28 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, HUMANA INC is 1.02 times less risky than Timothy Plan. It trades about 0.05 of its potential returns per unit of risk. Timothy Plan is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,462  in Timothy Plan on December 30, 2024 and sell it today you would earn a total of  77.00  from holding Timothy Plan or generate 3.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

HUMANA INC  vs.  Timothy Plan

HUMANA INC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Timothy Plan

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Timothy Plan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HUMANA and Timothy Plan

The main advantage of trading using opposite HUMANA and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Timothy Plan 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 Timothy Plan will offset losses from the drop in Timothy Plan's long position.

The idea behind HUMANA INC and Timothy Plan 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.