Correlation Between HUMANA and Aegon Funding

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

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

Diversification Opportunities for HUMANA and Aegon Funding

0.36

Correlation Coefficient

HUMANA  Aegon Funding

Weak diversification

The 3 months correlation between HUMANA and Aegon is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Aegon Funding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon Funding 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 Aegon Funding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon Funding has no effect on the direction of HUMANA i.e., HUMANA and Aegon Funding go up and down completely randomly.

Pair Corralation between HUMANA and Aegon Funding

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.81 times more return on investment than Aegon Funding. However, HUMANA INC is 1.23 times less risky than Aegon Funding. It trades about 0.16 of its potential returns per unit of risk. Aegon Funding is currently generating about 0.04 per unit of risk. If you would invest  8,007  in HUMANA INC on April 7, 2024 and sell it today you would earn a total of  175.00  from holding HUMANA INC or generate 2.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

HUMANA INC  vs.  Aegon Funding

HUMANA INC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 7 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Aegon Funding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon Funding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Aegon Funding is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HUMANA and Aegon Funding

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

The idea behind HUMANA INC and Aegon Funding 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.