Correlation Between HUMANA and Allegion PLC
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By analyzing existing cross correlation between HUMANA INC and Allegion PLC, you can compare the effects of market volatilities on HUMANA and Allegion PLC 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 Allegion PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Allegion PLC.
Diversification Opportunities for HUMANA and Allegion PLC
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HUMANA and Allegion is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Allegion PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegion PLC 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 Allegion PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegion PLC has no effect on the direction of HUMANA i.e., HUMANA and Allegion PLC go up and down completely randomly.
Pair Corralation between HUMANA and Allegion PLC
Assuming the 90 days trading horizon HUMANA INC is expected to generate 54.04 times more return on investment than Allegion PLC. However, HUMANA is 54.04 times more volatile than Allegion PLC. It trades about 0.07 of its potential returns per unit of risk. Allegion PLC is currently generating about 0.04 per unit of risk. If you would invest 8,012 in HUMANA INC on September 2, 2024 and sell it today you would lose (317.00) from holding HUMANA INC or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.95% |
| Values | Daily Returns |
HUMANA INC vs. Allegion PLC
Performance |
| Timeline |
| HUMANA INC |
| Allegion PLC |
HUMANA and Allegion PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUMANA and Allegion PLC
The main advantage of trading using opposite HUMANA and Allegion PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Allegion PLC 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 Allegion PLC will offset losses from the drop in Allegion PLC's long position.The idea behind HUMANA INC and Allegion PLC 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.| Allegion PLC vs. MSA Safety | Allegion PLC vs. Resideo Technologies | Allegion PLC vs. NL Industries | Allegion PLC vs. Brady |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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