Correlation Between HUMANA and Value Line

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

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

Diversification Opportunities for HUMANA and Value Line

-0.46

Correlation Coefficient

HUMANA  Value Line

Very good diversification

The 3 months correlation between HUMANA and Value is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Value Line Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Select 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Select has no effect on the direction of HUMANA i.e., HUMANA and Value Line go up and down completely randomly.

Pair Corralation between HUMANA and Value Line

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Value Line. In addition to that, HUMANA is 1.1 times more volatile than Value Line Select. It trades about -0.15 of its total potential returns per unit of risk. Value Line Select is currently generating about 0.12 per unit of volatility. If you would invest  3,943  in Value Line Select on September 2, 2024 and sell it today you would earn a total of  217.00  from holding Value Line Select or generate 5.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

HUMANA INC  vs.  Value Line Select

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 weak 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.

Value Line Select

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Value Line Select are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Value Line 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 Value Line

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

The idea behind HUMANA INC and Value Line Select 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.