Correlation Between HUMANA and Strats SM
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By analyzing existing cross correlation between HUMANA INC and Strats SM Trust, you can compare the effects of market volatilities on HUMANA and Strats SM 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 Strats SM. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Strats SM.
Diversification Opportunities for HUMANA and Strats SM
Good diversification
The 3 months correlation between HUMANA and Strats is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Strats SM Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats SM Trust 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 Strats SM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats SM Trust has no effect on the direction of HUMANA i.e., HUMANA and Strats SM go up and down completely randomly.
Pair Corralation between HUMANA and Strats SM
Assuming the 90 days trading horizon HUMANA INC is expected to generate 19.86 times more return on investment than Strats SM. However, HUMANA is 19.86 times more volatile than Strats SM Trust. It trades about 0.07 of its potential returns per unit of risk. Strats SM Trust is currently generating about 0.03 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 | 71.67% |
| Values | Daily Returns |
HUMANA INC vs. Strats SM Trust
Performance |
| Timeline |
| HUMANA INC |
| Strats SM Trust |
HUMANA and Strats SM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUMANA and Strats SM
The main advantage of trading using opposite HUMANA and Strats SM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Strats SM 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 Strats SM will offset losses from the drop in Strats SM's long position.The idea behind HUMANA INC and Strats SM Trust 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.| Strats SM vs. STRATS SM Trust | Strats SM vs. STRATSSM Certificates series | Strats SM vs. STRATS SM Trust | Strats SM vs. Strats SM Trust |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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