Correlation Between Humana and IShares Global

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

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

Diversification Opportunities for Humana and IShares Global

-0.69

Correlation Coefficient

Humana  IShares Global

Excellent diversification

The 3 months correlation between Humana and IShares is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and iShares Global Comm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Comm 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Comm has no effect on the direction of Humana i.e., Humana and IShares Global go up and down completely randomly.

Pair Corralation between Humana and IShares Global

Considering the 90-day investment horizon Humana Inc is expected to under-perform the IShares Global. In addition to that, Humana is 4.19 times more volatile than iShares Global Comm. It trades about -0.08 of its total potential returns per unit of risk. iShares Global Comm is currently generating about 0.2 per unit of volatility. If you would invest  8,807  in iShares Global Comm on September 2, 2024 and sell it today you would earn a total of  911.00  from holding iShares Global Comm or generate 10.34% 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.  iShares Global Comm

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.

iShares Global Comm

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Comm are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Humana and IShares Global

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

The idea behind Humana Inc and iShares Global Comm 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.