Correlation Between HUMANA and Cohen

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

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

Diversification Opportunities for HUMANA and Cohen

0.78

Correlation Coefficient

HUMANA  Cohen

Poor diversification

The 3 months correlation between HUMANA and Cohen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Cohen And Steers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen And Steers 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 Cohen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen And Steers has no effect on the direction of HUMANA i.e., HUMANA and Cohen go up and down completely randomly.

Pair Corralation between HUMANA and Cohen

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.96 times more return on investment than Cohen. However, HUMANA INC is 1.04 times less risky than Cohen. It trades about -0.07 of its potential returns per unit of risk. Cohen And Steers is currently generating about -0.09 per unit of risk. If you would invest  8,195  in HUMANA INC on November 29, 2024 and sell it today you would lose (296.00) from holding HUMANA INC or give up 3.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.72%
Values	Daily Returns

HUMANA INC  vs.  Cohen And Steers

HUMANA INC

Risk-Adjusted Performance

Very Weak

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.

Cohen And Steers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cohen And Steers has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Cohen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HUMANA and Cohen

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

The idea behind HUMANA INC and Cohen And Steers 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.