Correlation Between Willamette Valley and HUMANA

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

By analyzing existing cross correlation between Willamette Valley Vineyards and HUMANA INC, you can compare the effects of market volatilities on Willamette Valley and HUMANA 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 Willamette Valley with a short position of HUMANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and HUMANA.

Diversification Opportunities for Willamette Valley and HUMANA

0.25

Correlation Coefficient

Willamette Valley  HUMANA

Modest diversification

The 3 months correlation between Willamette and HUMANA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Willamette Valley 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 Willamette Valley Vineyards are associated (or correlated) with HUMANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUMANA INC has no effect on the direction of Willamette Valley i.e., Willamette Valley and HUMANA go up and down completely randomly.

Pair Corralation between Willamette Valley and HUMANA

Assuming the 90 days horizon Willamette Valley Vineyards is expected to under-perform the HUMANA. But the preferred stock apears to be less risky and, when comparing its historical volatility, Willamette Valley Vineyards is 28.73 times less risky than HUMANA. The preferred stock trades about -0.01 of its potential returns per unit of risk. The HUMANA INC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,140  in HUMANA INC on October 25, 2024 and sell it today you would earn a total of  304.00  from holding HUMANA INC or generate 3.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.33%
Values	Daily Returns

Willamette Valley Vineyards  vs.  HUMANA INC

Willamette Valley

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Willamette Valley is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

HUMANA INC

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 6 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Willamette Valley and HUMANA

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

The idea behind Willamette Valley Vineyards and HUMANA INC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..