Correlation Between Humana AB and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Humana AB 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 AB 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 AB and Dow Jones Industrial, you can compare the effects of market volatilities on Humana AB 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 AB with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana AB and Dow Jones.
Diversification Opportunities for Humana AB and Dow Jones
Poor diversification
The 3 months correlation between Humana and Dow is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Humana AB 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 AB 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 AB 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 AB i.e., Humana AB and Dow Jones go up and down completely randomly.
Pair Corralation between Humana AB and Dow Jones
Assuming the 90 days trading horizon Humana AB is expected to generate 2.04 times less return on investment than Dow Jones. In addition to that, Humana AB is 2.6 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 0.17 per unit of volatility. If you would invest 4,233,015 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 253,016 from holding Dow Jones Industrial or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana AB vs. Dow Jones Industrial
Performance |
| Timeline |
Humana AB and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Humana AB
Pair trading matchups for Humana AB
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Humana AB and Dow Jones
The main advantage of trading using opposite Humana AB and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana AB 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.The idea behind Humana AB and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |