Correlation Between HUMANA and Aberdeen Gbl

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

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

Diversification Opportunities for HUMANA and Aberdeen Gbl

0.61

Correlation Coefficient

HUMANA  Aberdeen Gbl

Poor diversification

The 3 months correlation between HUMANA and Aberdeen is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Aberdeen Gbl Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Gbl Small 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 Aberdeen Gbl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Gbl Small has no effect on the direction of HUMANA i.e., HUMANA and Aberdeen Gbl go up and down completely randomly.

Pair Corralation between HUMANA and Aberdeen Gbl

Assuming the 90 days trading horizon HUMANA INC is expected to generate 93.0 times more return on investment than Aberdeen Gbl. However, HUMANA is 93.0 times more volatile than Aberdeen Gbl Small. It trades about 0.07 of its potential returns per unit of risk. Aberdeen Gbl Small is currently generating about 0.03 per unit of risk. If you would invest  8,175  in HUMANA INC on October 9, 2024 and sell it today you would earn a total of  269.00  from holding HUMANA INC or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.75%
Values	Daily Returns

HUMANA INC  vs.  Aberdeen Gbl Small

HUMANA INC

Risk-Adjusted Performance

4 of 100

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.

Aberdeen Gbl Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Gbl Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aberdeen Gbl 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 Aberdeen Gbl

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

The idea behind HUMANA INC and Aberdeen Gbl Small 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.