Correlation Between HUMANA and Guru Favorite

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Can any of the company-specific risk be diversified away by investing in both HUMANA and Guru Favorite at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HUMANA and Guru Favorite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUMANA INC and Guru Favorite Stocks, you can compare the effects of market volatilities on HUMANA and Guru Favorite 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 Guru Favorite. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Guru Favorite.

Diversification Opportunities for HUMANA and Guru Favorite

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between HUMANA and Guru is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Guru Favorite Stocks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guru Favorite Stocks 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 Guru Favorite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guru Favorite Stocks has no effect on the direction of HUMANA i.e., HUMANA and Guru Favorite go up and down completely randomly.

Pair Corralation between HUMANA and Guru Favorite

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Guru Favorite. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 1.15 times less risky than Guru Favorite. The bond trades about -0.09 of its potential returns per unit of risk. The Guru Favorite Stocks is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,240  in Guru Favorite Stocks on November 18, 2024 and sell it today you would earn a total of  26.00  from holding Guru Favorite Stocks or generate 0.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

HUMANA INC  vs.  Guru Favorite Stocks

 Performance 
       Timeline  
HUMANA INC 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Guru Favorite Stocks 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Guru Favorite Stocks are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Guru Favorite is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HUMANA and Guru Favorite Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HUMANA and Guru Favorite

The main advantage of trading using opposite HUMANA and Guru Favorite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Guru Favorite 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 Guru Favorite will offset losses from the drop in Guru Favorite's long position.
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The idea behind HUMANA INC and Guru Favorite Stocks 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.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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