Correlation Between Humana and Morgan Advanced
Can any of the company-specific risk be diversified away by investing in both Humana and Morgan Advanced 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 Morgan Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Morgan Advanced Materials, you can compare the effects of market volatilities on Humana and Morgan Advanced 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 Morgan Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Morgan Advanced.
Diversification Opportunities for Humana and Morgan Advanced
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Humana and Morgan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials 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 Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of Humana i.e., Humana and Morgan Advanced go up and down completely randomly.
Pair Corralation between Humana and Morgan Advanced
Assuming the 90 days trading horizon Humana Inc is expected to under-perform the Morgan Advanced. In addition to that, Humana is 1.67 times more volatile than Morgan Advanced Materials. It trades about -0.04 of its total potential returns per unit of risk. Morgan Advanced Materials is currently generating about -0.07 per unit of volatility. If you would invest 30,939 in Morgan Advanced Materials on September 1, 2024 and sell it today you would lose (4,389) from holding Morgan Advanced Materials or give up 14.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.23% |
| Values | Daily Returns |
Humana Inc vs. Morgan Advanced Materials
Performance |
| Timeline |
| Humana Inc |
| Morgan Advanced Materials |
Humana and Morgan Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Morgan Advanced
The main advantage of trading using opposite Humana and Morgan Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Morgan Advanced 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 Morgan Advanced will offset losses from the drop in Morgan Advanced's long position.| Humana vs. Greenroc Mining PLC | Humana vs. Invesco Physical Silver | Humana vs. GoldMining | Humana vs. Telecom Italia SpA |
| Morgan Advanced vs. Endeavour Mining Corp | Morgan Advanced vs. Bloomsbury Publishing Plc | Morgan Advanced vs. LPKF Laser Electronics | Morgan Advanced vs. Coeur Mining |
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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