Correlation Between HUMANA and TappAlpha SPY

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

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

Diversification Opportunities for HUMANA and TappAlpha SPY

-0.12

Correlation Coefficient

HUMANA  TappAlpha SPY

Good diversification

The 3 months correlation between HUMANA and TappAlpha is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and TappAlpha SPY Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TappAlpha SPY Growth 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 TappAlpha SPY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TappAlpha SPY Growth has no effect on the direction of HUMANA i.e., HUMANA and TappAlpha SPY go up and down completely randomly.

Pair Corralation between HUMANA and TappAlpha SPY

Assuming the 90 days trading horizon HUMANA INC is expected to generate 1.13 times more return on investment than TappAlpha SPY. However, HUMANA is 1.13 times more volatile than TappAlpha SPY Growth. It trades about 0.0 of its potential returns per unit of risk. TappAlpha SPY Growth is currently generating about -0.21 per unit of risk. If you would invest  8,197  in HUMANA INC on October 10, 2024 and sell it today you would lose (11.00) from holding HUMANA INC or give up 0.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HUMANA INC  vs.  TappAlpha SPY Growth

HUMANA INC

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

TappAlpha SPY Growth

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TappAlpha SPY Growth are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, TappAlpha SPY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and TappAlpha SPY

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

The idea behind HUMANA INC and TappAlpha SPY Growth 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.