Correlation Between Citigroup and HUMANA

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

By analyzing existing cross correlation between Citigroup and HUMANA INC 395, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of HUMANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and HUMANA.

Diversification Opportunities for Citigroup and HUMANA

-0.61

Correlation Coefficient

Citigroup  HUMANA

Excellent diversification

The 3 months correlation between Citigroup and HUMANA is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and HUMANA INC 395 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC 5 and Citigroup 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 Citigroup 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 5 has no effect on the direction of Citigroup i.e., Citigroup and HUMANA go up and down completely randomly.

Pair Corralation between Citigroup and HUMANA

Taking into account the 90-day investment horizon Citigroup is expected to generate 5.85 times more return on investment than HUMANA. However, Citigroup is 5.85 times more volatile than HUMANA INC 395. It trades about 0.19 of its potential returns per unit of risk. HUMANA INC 395 is currently generating about -0.1 per unit of risk. If you would invest  5,788  in Citigroup on September 14, 2024 and sell it today you would earn a total of  1,408  from holding Citigroup or generate 24.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Citigroup  vs.  HUMANA INC 395

Citigroup

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

HUMANA INC 5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC 395 has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Citigroup and HUMANA

The main advantage of trading using opposite Citigroup and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.

The idea behind Citigroup and HUMANA INC 395 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.