Correlation Between HUMANA and Potomac Bancshares
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By analyzing existing cross correlation between HUMANA INC and Potomac Bancshares, you can compare the effects of market volatilities on HUMANA and Potomac Bancshares 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 Potomac Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Potomac Bancshares.
Diversification Opportunities for HUMANA and Potomac Bancshares
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HUMANA and Potomac is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Potomac Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Potomac Bancshares 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 Potomac Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Potomac Bancshares has no effect on the direction of HUMANA i.e., HUMANA and Potomac Bancshares go up and down completely randomly.
Pair Corralation between HUMANA and Potomac Bancshares
Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Potomac Bancshares. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 2.11 times less risky than Potomac Bancshares. The bond trades about -0.15 of its potential returns per unit of risk. The Potomac Bancshares is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,550 in Potomac Bancshares on September 13, 2024 and sell it today you would earn a total of 75.00 from holding Potomac Bancshares or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
HUMANA INC vs. Potomac Bancshares
Performance |
| Timeline |
| HUMANA INC |
| Potomac Bancshares |
HUMANA and Potomac Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUMANA and Potomac Bancshares
The main advantage of trading using opposite HUMANA and Potomac Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Potomac Bancshares 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 Potomac Bancshares will offset losses from the drop in Potomac Bancshares' long position.| HUMANA vs. Morgan Stanley | HUMANA vs. Infosys Ltd ADR | HUMANA vs. Citizens Bancorp Investment | HUMANA vs. Small Cap Premium |
| Potomac Bancshares vs. Freedom Bank of | Potomac Bancshares vs. HUMANA INC | Potomac Bancshares vs. Barloworld Ltd ADR | Potomac Bancshares vs. Morningstar Unconstrained Allocation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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