Correlation Between HUMANA and ProShares UltraShort
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By analyzing existing cross correlation between HUMANA INC and ProShares UltraShort Oil, you can compare the effects of market volatilities on HUMANA and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and ProShares UltraShort.
Diversification Opportunities for HUMANA and ProShares UltraShort
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HUMANA and ProShares is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and ProShares UltraShort Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Oil 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort Oil has no effect on the direction of HUMANA i.e., HUMANA and ProShares UltraShort go up and down completely randomly.
Pair Corralation between HUMANA and ProShares UltraShort
Assuming the 90 days trading horizon HUMANA INC is expected to generate 24.25 times more return on investment than ProShares UltraShort. However, HUMANA is 24.25 times more volatile than ProShares UltraShort Oil. It trades about 0.07 of its potential returns per unit of risk. ProShares UltraShort Oil is currently generating about -0.02 per unit of risk. If you would invest 8,201 in HUMANA INC on February 3, 2024 and sell it today you would lose (105.00) from holding HUMANA INC or give up 1.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 91.09% |
Values | Daily Returns |
HUMANA INC vs. ProShares UltraShort Oil
Performance |
Timeline |
HUMANA INC |
ProShares UltraShort Oil |
HUMANA and ProShares UltraShort Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HUMANA and ProShares UltraShort
The main advantage of trading using opposite HUMANA and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.The idea behind HUMANA INC and ProShares UltraShort Oil 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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