Correlation Between First Trust and HUMANA
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By analyzing existing cross correlation between First Trust NASDAQ 100 and HUMANA INC, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of HUMANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and HUMANA.
Diversification Opportunities for First Trust and HUMANA
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and HUMANA is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ 100 and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and First Trust 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 First Trust NASDAQ 100 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 First Trust i.e., First Trust and HUMANA go up and down completely randomly.
Pair Corralation between First Trust and HUMANA
Given the investment horizon of 90 days First Trust NASDAQ 100 is expected to generate 1.65 times more return on investment than HUMANA. However, First Trust is 1.65 times more volatile than HUMANA INC. It trades about 0.17 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.07 per unit of risk. If you would invest 12,640 in First Trust NASDAQ 100 on August 29, 2024 and sell it today you would earn a total of 511.00 from holding First Trust NASDAQ 100 or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
First Trust NASDAQ 100 vs. HUMANA INC
Performance |
| Timeline |
| First Trust NASDAQ |
| HUMANA INC |
First Trust and HUMANA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and HUMANA
The main advantage of trading using opposite First Trust and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust NASDAQ 100 | First Trust vs. First Trust NASDAQ 100 Technology | First Trust vs. Direxion NASDAQ 100 Equal | First Trust vs. First Trust Large |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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