Correlation Between Humana and WisdomTree China
Can any of the company-specific risk be diversified away by investing in both Humana and WisdomTree China 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 WisdomTree China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and WisdomTree China ex State Owned, you can compare the effects of market volatilities on Humana and WisdomTree China 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 WisdomTree China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and WisdomTree China.
Diversification Opportunities for Humana and WisdomTree China
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Humana and WisdomTree is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and WisdomTree China ex State Owne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree China 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 WisdomTree China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree China has no effect on the direction of Humana i.e., Humana and WisdomTree China go up and down completely randomly.
Pair Corralation between Humana and WisdomTree China
Considering the 90-day investment horizon Humana Inc is expected to generate 1.36 times more return on investment than WisdomTree China. However, Humana is 1.36 times more volatile than WisdomTree China ex State Owned. It trades about 0.17 of its potential returns per unit of risk. WisdomTree China ex State Owned is currently generating about -0.08 per unit of risk. If you would invest 26,632 in Humana Inc on August 31, 2024 and sell it today you would earn a total of 3,036 from holding Humana Inc or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. WisdomTree China ex State Owne
Performance |
| Timeline |
| Humana Inc |
| WisdomTree China |
Humana and WisdomTree China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and WisdomTree China
The main advantage of trading using opposite Humana and WisdomTree China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, WisdomTree China 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 WisdomTree China will offset losses from the drop in WisdomTree China's long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| WisdomTree China vs. Xtrackers Harvest CSI | WisdomTree China vs. Aquagold International | WisdomTree China vs. Thrivent High Yield | WisdomTree China vs. Morningstar Unconstrained Allocation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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