Correlation Between HUMANA and Select Fund

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

By analyzing existing cross correlation between HUMANA INC and Select Fund A, you can compare the effects of market volatilities on HUMANA and Select Fund 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 Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Select Fund.

Diversification Opportunities for HUMANA and Select Fund

-0.09

Correlation Coefficient

HUMANA  Select Fund

Good diversification

The 3 months correlation between HUMANA and Select is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Select Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund A 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 Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund A has no effect on the direction of HUMANA i.e., HUMANA and Select Fund go up and down completely randomly.

Pair Corralation between HUMANA and Select Fund

Assuming the 90 days trading horizon HUMANA INC is expected to generate 64.36 times more return on investment than Select Fund. However, HUMANA is 64.36 times more volatile than Select Fund A. It trades about 0.07 of its potential returns per unit of risk. Select Fund A is currently generating about 0.06 per unit of risk. If you would invest  8,039  in HUMANA INC on February 16, 2024 and sell it today you would lose (81.00) from holding HUMANA INC or give up 1.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.16%
Values	Daily Returns

HUMANA INC  vs.  Select Fund A

HUMANA INC

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Select Fund A

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Select Fund A are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Select Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and Select Fund

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

The idea behind HUMANA INC and Select Fund A 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.