Correlation Between HUMANA and WisdomTree
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By analyzing existing cross correlation between HUMANA INC and WisdomTree, you can compare the effects of market volatilities on HUMANA and WisdomTree 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 WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and WisdomTree.
Diversification Opportunities for HUMANA and WisdomTree
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HUMANA and WisdomTree is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and WisdomTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree 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 WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree has no effect on the direction of HUMANA i.e., HUMANA and WisdomTree go up and down completely randomly.
Pair Corralation between HUMANA and WisdomTree
Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the WisdomTree. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 3.2 times less risky than WisdomTree. The bond trades about -0.07 of its potential returns per unit of risk. The WisdomTree is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,041 in WisdomTree on August 29, 2024 and sell it today you would earn a total of 135.00 from holding WisdomTree or generate 12.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
HUMANA INC vs. WisdomTree
Performance |
| Timeline |
| HUMANA INC |
| WisdomTree |
HUMANA and WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUMANA and WisdomTree
The main advantage of trading using opposite HUMANA and WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, WisdomTree 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 WisdomTree will offset losses from the drop in WisdomTree's long position.The idea behind HUMANA INC and WisdomTree 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.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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