Correlation Between HUMANA and Invesco SP

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Can any of the company-specific risk be diversified away by investing in both HUMANA and Invesco SP 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 Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUMANA INC and Invesco SP SmallCap, you can compare the effects of market volatilities on HUMANA and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Invesco SP.

Diversification Opportunities for HUMANA and Invesco SP

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between HUMANA and Invesco is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Invesco SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP SmallCap 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP SmallCap has no effect on the direction of HUMANA i.e., HUMANA and Invesco SP go up and down completely randomly.

Pair Corralation between HUMANA and Invesco SP

Assuming the 90 days trading horizon HUMANA INC is expected to generate 62.84 times more return on investment than Invesco SP. However, HUMANA is 62.84 times more volatile than Invesco SP SmallCap. It trades about 0.07 of its potential returns per unit of risk. Invesco SP SmallCap is currently generating about 0.07 per unit of risk. If you would invest  8,074  in HUMANA INC on September 4, 2024 and sell it today you would lose (39.00) from holding HUMANA INC or give up 0.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy93.54%
ValuesDaily Returns

HUMANA INC  vs.  Invesco SP SmallCap

 Performance 
       Timeline  
HUMANA INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
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 recent stock price disturbance, may contribute to short-term losses for the investors.
Invesco SP SmallCap 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP SmallCap are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Invesco SP displayed solid returns over the last few months and may actually be approaching a breakup point.

HUMANA and Invesco SP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HUMANA and Invesco SP

The main advantage of trading using opposite HUMANA and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Invesco SP 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 Invesco SP will offset losses from the drop in Invesco SP's long position.
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The idea behind HUMANA INC and Invesco SP SmallCap 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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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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