Correlation Between Humana and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Humana and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Dow Jones Industrial, you can compare the effects of market volatilities on Humana and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Dow Jones.
Diversification Opportunities for Humana and Dow Jones
Excellent diversification
The 3 months correlation between Humana and Dow is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Humana i.e., Humana and Dow Jones go up and down completely randomly.
Pair Corralation between Humana and Dow Jones
Assuming the 90 days trading horizon Humana Inc is expected to under-perform the Dow Jones. In addition to that, Humana is 3.15 times more volatile than Dow Jones Industrial. It trades about -0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of volatility. If you would invest 3,326,977 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,102,674 from holding Dow Jones Industrial or generate 33.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.16% |
| Values | Daily Returns |
Humana Inc vs. Dow Jones Industrial
Performance |
| Timeline |
Humana and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Humana Inc
Pair trading matchups for Humana
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Humana and Dow Jones
The main advantage of trading using opposite Humana and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Humana vs. CAP LEASE AVIATION | Humana vs. Cairn Homes PLC | Humana vs. Martin Marietta Materials | Humana vs. Ecclesiastical Insurance Office |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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