Correlation Between HUMANA and Commonwealth Japan
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By analyzing existing cross correlation between HUMANA INC and Commonwealth Japan Fund, you can compare the effects of market volatilities on HUMANA and Commonwealth Japan 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 Commonwealth Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Commonwealth Japan.
Diversification Opportunities for HUMANA and Commonwealth Japan
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HUMANA and Commonwealth is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Commonwealth Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Japan 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 Commonwealth Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Japan has no effect on the direction of HUMANA i.e., HUMANA and Commonwealth Japan go up and down completely randomly.
Pair Corralation between HUMANA and Commonwealth Japan
Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Commonwealth Japan. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 1.59 times less risky than Commonwealth Japan. The bond trades about -0.07 of its potential returns per unit of risk. The Commonwealth Japan Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 377.00 in Commonwealth Japan Fund on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Commonwealth Japan Fund or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
HUMANA INC vs. Commonwealth Japan Fund
Performance |
| Timeline |
| HUMANA INC |
| Commonwealth Japan |
HUMANA and Commonwealth Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUMANA and Commonwealth Japan
The main advantage of trading using opposite HUMANA and Commonwealth Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Commonwealth Japan 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 Commonwealth Japan will offset losses from the drop in Commonwealth Japan's long position.The idea behind HUMANA INC and Commonwealth Japan Fund 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.| Commonwealth Japan vs. Hennessy Japan Fund | Commonwealth Japan vs. Hennessy Japan Fund | Commonwealth Japan vs. Wasatch Emerging India | Commonwealth Japan vs. Global Opportunity Portfolio |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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