Correlation Between Humana and MicroSectors FANG
Can any of the company-specific risk be diversified away by investing in both Humana and MicroSectors FANG 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 MicroSectors FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and MicroSectors FANG Index, you can compare the effects of market volatilities on Humana and MicroSectors FANG 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 MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and MicroSectors FANG.
Diversification Opportunities for Humana and MicroSectors FANG
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Humana and MicroSectors is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and MicroSectors FANG Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG Index 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 MicroSectors FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors FANG Index has no effect on the direction of Humana i.e., Humana and MicroSectors FANG go up and down completely randomly.
Pair Corralation between Humana and MicroSectors FANG
Considering the 90-day investment horizon Humana Inc is expected to under-perform the MicroSectors FANG. But the etf apears to be less risky and, when comparing its historical volatility, Humana Inc is 1.21 times less risky than MicroSectors FANG. The etf trades about -0.07 of its potential returns per unit of risk. The MicroSectors FANG Index is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,203 in MicroSectors FANG Index on August 24, 2024 and sell it today you would earn a total of 4,086 from holding MicroSectors FANG Index or generate 97.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. MicroSectors FANG Index
Performance |
| Timeline |
| Humana Inc |
| MicroSectors FANG Index |
Humana and MicroSectors FANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and MicroSectors FANG
The main advantage of trading using opposite Humana and MicroSectors FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, MicroSectors FANG 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 MicroSectors FANG will offset losses from the drop in MicroSectors FANG's long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| MicroSectors FANG vs. ProShares Ultra SP500 | MicroSectors FANG vs. ProShares Ultra QQQ | MicroSectors FANG vs. Direxion Daily Technology | MicroSectors FANG vs. Direxion Daily SP |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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