Correlation Between Humana and Xtrackers High

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

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

Diversification Opportunities for Humana and Xtrackers High

-0.67

Correlation Coefficient

Humana  Xtrackers High

Excellent diversification

The 3 months correlation between Humana and Xtrackers is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Xtrackers High Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers High Beta 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 Xtrackers High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers High Beta has no effect on the direction of Humana i.e., Humana and Xtrackers High go up and down completely randomly.

Pair Corralation between Humana and Xtrackers High

Considering the 90-day investment horizon Humana Inc is expected to under-perform the Xtrackers High. In addition to that, Humana is 15.22 times more volatile than Xtrackers High Beta. It trades about -0.08 of its total potential returns per unit of risk. Xtrackers High Beta is currently generating about 0.31 per unit of volatility. If you would invest  4,086  in Xtrackers High Beta on September 2, 2024 and sell it today you would earn a total of  174.00  from holding Xtrackers High Beta or generate 4.26% 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.  Xtrackers High Beta

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 abnormal performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Xtrackers High Beta

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers High Beta are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Xtrackers High is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Humana and Xtrackers High

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

The idea behind Humana Inc and Xtrackers High Beta 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.