Correlation Between Humana and CAP LEASE
Can any of the company-specific risk be diversified away by investing in both Humana and CAP LEASE 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 CAP LEASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and CAP LEASE AVIATION, you can compare the effects of market volatilities on Humana and CAP LEASE 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 CAP LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and CAP LEASE.
Diversification Opportunities for Humana and CAP LEASE
Poor diversification
The 3 months correlation between Humana and CAP is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and CAP LEASE AVIATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP LEASE AVIATION 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 CAP LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP LEASE AVIATION has no effect on the direction of Humana i.e., Humana and CAP LEASE go up and down completely randomly.
Pair Corralation between Humana and CAP LEASE
Assuming the 90 days trading horizon Humana Inc is expected to generate 0.69 times more return on investment than CAP LEASE. However, Humana Inc is 1.45 times less risky than CAP LEASE. It trades about -0.04 of its potential returns per unit of risk. CAP LEASE AVIATION is currently generating about -0.03 per unit of risk. If you would invest 53,002 in Humana Inc on August 30, 2024 and sell it today you would lose (23,294) from holding Humana Inc or give up 43.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.86% |
| Values | Daily Returns |
Humana Inc vs. CAP LEASE AVIATION
Performance |
| Timeline |
| Humana Inc |
| CAP LEASE AVIATION |
Humana and CAP LEASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and CAP LEASE
The main advantage of trading using opposite Humana and CAP LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, CAP LEASE 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 CAP LEASE will offset losses from the drop in CAP LEASE's long position.| Humana vs. Lendinvest PLC | Humana vs. Neometals | Humana vs. Albion Technology General | Humana vs. Jupiter Fund Management |
| CAP LEASE vs. DXC Technology Co | CAP LEASE vs. bet at home AG | CAP LEASE vs. American Homes 4 | CAP LEASE vs. Ecclesiastical Insurance Office |
Check out your portfolio center.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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