Correlation Between Humana and Schwab Fundamental

Can any of the company-specific risk be diversified away by investing in both Humana and Schwab Fundamental 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 Schwab Fundamental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Humana Inc and Schwab Fundamental Emerging, you can compare the effects of market volatilities on Humana and Schwab Fundamental 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 Schwab Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Schwab Fundamental.

Diversification Opportunities for Humana and Schwab Fundamental

-0.76

Correlation Coefficient

Humana  Schwab Fundamental

Pay attention - limited upside

The 3 months correlation between Humana and Schwab is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Schwab Fundamental Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Fundamental 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 Schwab Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Fundamental has no effect on the direction of Humana i.e., Humana and Schwab Fundamental go up and down completely randomly.

Pair Corralation between Humana and Schwab Fundamental

Considering the 90-day investment horizon Humana Inc is expected to generate 1.56 times more return on investment than Schwab Fundamental. However, Humana is 1.56 times more volatile than Schwab Fundamental Emerging. It trades about 0.13 of its potential returns per unit of risk. Schwab Fundamental Emerging is currently generating about 0.14 per unit of risk. If you would invest  30,806  in Humana Inc on February 3, 2024 and sell it today you would earn a total of  1,292  from holding Humana Inc or generate 4.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Humana Inc  vs.  Schwab Fundamental Emerging

Humana Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humana Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Schwab Fundamental

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Fundamental Emerging are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Schwab Fundamental may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Humana and Schwab Fundamental

The main advantage of trading using opposite Humana and Schwab Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Schwab Fundamental 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 Schwab Fundamental will offset losses from the drop in Schwab Fundamental's long position.

The idea behind Humana Inc and Schwab Fundamental Emerging 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.