Correlation Between HUMANA and Biotechnology Ultrasector
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By analyzing existing cross correlation between HUMANA INC and Biotechnology Ultrasector Profund, you can compare the effects of market volatilities on HUMANA and Biotechnology Ultrasector 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 Biotechnology Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Biotechnology Ultrasector.
Diversification Opportunities for HUMANA and Biotechnology Ultrasector
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HUMANA and Biotechnology is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Biotechnology Ultrasector Prof in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotechnology Ultrasector 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 Biotechnology Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotechnology Ultrasector has no effect on the direction of HUMANA i.e., HUMANA and Biotechnology Ultrasector go up and down completely randomly.
Pair Corralation between HUMANA and Biotechnology Ultrasector
Assuming the 90 days trading horizon HUMANA INC is expected to generate 32.09 times more return on investment than Biotechnology Ultrasector. However, HUMANA is 32.09 times more volatile than Biotechnology Ultrasector Profund. It trades about 0.07 of its potential returns per unit of risk. Biotechnology Ultrasector Profund is currently generating about 0.02 per unit of risk. If you would invest 8,028 in HUMANA INC on August 30, 2024 and sell it today you would lose (333.00) from holding HUMANA INC or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.74% |
| Values | Daily Returns |
HUMANA INC vs. Biotechnology Ultrasector Prof
Performance |
| Timeline |
| HUMANA INC |
| Biotechnology Ultrasector |
HUMANA and Biotechnology Ultrasector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUMANA and Biotechnology Ultrasector
The main advantage of trading using opposite HUMANA and Biotechnology Ultrasector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Biotechnology Ultrasector 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 Biotechnology Ultrasector will offset losses from the drop in Biotechnology Ultrasector's long position.The idea behind HUMANA INC and Biotechnology Ultrasector Profund 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.| Biotechnology Ultrasector vs. Direxion Monthly Nasdaq 100 | Biotechnology Ultrasector vs. HUMANA INC | Biotechnology Ultrasector vs. Aquagold International | Biotechnology Ultrasector vs. Barloworld Ltd ADR |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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