Correlation Between HUMANA and First Trust
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By analyzing existing cross correlation between HUMANA INC and First Trust Managed, you can compare the effects of market volatilities on HUMANA and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and First Trust.
Diversification Opportunities for HUMANA and First Trust
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between HUMANA and First is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and First Trust Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Managed 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Managed has no effect on the direction of HUMANA i.e., HUMANA and First Trust go up and down completely randomly.
Pair Corralation between HUMANA and First Trust
Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the First Trust. In addition to that, HUMANA is 4.79 times more volatile than First Trust Managed. It trades about -0.18 of its total potential returns per unit of risk. First Trust Managed is currently generating about 0.21 per unit of volatility. If you would invest 2,045 in First Trust Managed on September 2, 2024 and sell it today you would earn a total of 22.00 from holding First Trust Managed or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
HUMANA INC vs. First Trust Managed
Performance |
| Timeline |
| HUMANA INC |
| First Trust Managed |
HUMANA and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUMANA and First Trust
The main advantage of trading using opposite HUMANA and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.The idea behind HUMANA INC and First Trust Managed 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.| First Trust vs. Franklin Templeton Multi Asset | First Trust vs. First Trust Short | First Trust vs. First Trust Short | First Trust vs. First Trust Short |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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