Correlation Between Humana and Eco Animal
Can any of the company-specific risk be diversified away by investing in both Humana and Eco Animal 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 Eco Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Eco Animal Health, you can compare the effects of market volatilities on Humana and Eco Animal 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 Eco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Eco Animal.
Diversification Opportunities for Humana and Eco Animal
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Humana and Eco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Eco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Animal Health 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 Eco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Animal Health has no effect on the direction of Humana i.e., Humana and Eco Animal go up and down completely randomly.
Pair Corralation between Humana and Eco Animal
Assuming the 90 days trading horizon Humana Inc is expected to generate 1.14 times more return on investment than Eco Animal. However, Humana is 1.14 times more volatile than Eco Animal Health. It trades about 0.21 of its potential returns per unit of risk. Eco Animal Health is currently generating about -0.04 per unit of risk. If you would invest 26,131 in Humana Inc on September 1, 2024 and sell it today you would earn a total of 3,668 from holding Humana Inc or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Humana Inc vs. Eco Animal Health
Performance |
| Timeline |
| Humana Inc |
| Eco Animal Health |
Humana and Eco Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Eco Animal
The main advantage of trading using opposite Humana and Eco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Eco Animal 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 Eco Animal will offset losses from the drop in Eco Animal's long position.| Humana vs. Greenroc Mining PLC | Humana vs. Invesco Physical Silver | Humana vs. GoldMining | Humana vs. Telecom Italia SpA |
| Eco Animal vs. Viridian Therapeutics | Eco Animal vs. CVR Energy | Eco Animal vs. Nationwide Building Society | Eco Animal vs. Dollar Tree |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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