Correlation Between SMA Solar and Humana
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Humana Inc, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Humana.
Diversification Opportunities for SMA Solar and Humana
Average diversification
The 3 months correlation between SMA and Humana is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Humana go up and down completely randomly.
Pair Corralation between SMA Solar and Humana
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Humana. In addition to that, SMA Solar is 1.48 times more volatile than Humana Inc. It trades about -0.17 of its total potential returns per unit of risk. Humana Inc is currently generating about -0.06 per unit of volatility. If you would invest 35,550 in Humana Inc on September 12, 2024 and sell it today you would lose (7,764) from holding Humana Inc or give up 21.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Humana Inc
Performance |
| Timeline |
| SMA Solar Technology |
| Humana Inc |
SMA Solar and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Humana
The main advantage of trading using opposite SMA Solar and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Hong Kong Land | SMA Solar vs. Neometals | SMA Solar vs. Coor Service Management | SMA Solar vs. Fidelity Sustainable USD |
| Humana vs. SMA Solar Technology | Humana vs. Iron Mountain | Humana vs. X FAB Silicon Foundries | Humana vs. Polar Capital Technology |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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