Correlation Between PureTech Health and Humana
Can any of the company-specific risk be diversified away by investing in both PureTech Health 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 PureTech Health and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and Humana Inc, you can compare the effects of market volatilities on PureTech Health 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 PureTech Health with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Humana.
Diversification Opportunities for PureTech Health and Humana
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between PureTech and Humana is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and PureTech Health 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 PureTech Health plc 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 PureTech Health i.e., PureTech Health and Humana go up and down completely randomly.
Pair Corralation between PureTech Health and Humana
Assuming the 90 days trading horizon PureTech Health is expected to generate 1.62 times less return on investment than Humana. But when comparing it to its historical volatility, PureTech Health plc is 1.07 times less risky than Humana. It trades about 0.12 of its potential returns per unit of risk. Humana Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 26,473 in Humana Inc on August 31, 2024 and sell it today you would earn a total of 3,199 from holding Humana Inc or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PureTech Health plc vs. Humana Inc
Performance |
| Timeline |
| PureTech Health plc |
| Humana Inc |
PureTech Health and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and Humana
The main advantage of trading using opposite PureTech Health and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health 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.| PureTech Health vs. JD Sports Fashion | PureTech Health vs. Albion Technology General | PureTech Health vs. Accsys Technologies PLC | PureTech Health vs. Wyndham Hotels Resorts |
| Humana vs. Young Cos Brewery | Humana vs. PureTech Health plc | Humana vs. MTI Wireless Edge | Humana vs. Ashtead Technology Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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