Correlation Between Virtus Global and HUMANA

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

Diversification Opportunities for Virtus Global and HUMANA

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Virtus and HUMANA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Global Real and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Virtus Global 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 Virtus Global Real are associated (or correlated) with HUMANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUMANA INC has no effect on the direction of Virtus Global i.e., Virtus Global and HUMANA go up and down completely randomly.

Pair Corralation between Virtus Global and HUMANA

Assuming the 90 days horizon Virtus Global Real is expected to generate 0.55 times more return on investment than HUMANA. However, Virtus Global Real is 1.81 times less risky than HUMANA. It trades about -0.05 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.19 per unit of risk. If you would invest  3,380  in Virtus Global Real on September 13, 2024 and sell it today you would lose (23.00) from holding Virtus Global Real or give up 0.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Virtus Global Real  vs.  HUMANA INC

 Performance 
       Timeline  
Virtus Global Real 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Virtus Global Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
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 latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

Virtus Global and HUMANA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Virtus Global and HUMANA

The main advantage of trading using opposite Virtus Global and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Global position performs unexpectedly, HUMANA 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 HUMANA will offset losses from the drop in HUMANA's long position.
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The idea behind Virtus Global Real and HUMANA INC 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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