Correlation Between Humana and ETF Series

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

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

Diversification Opportunities for Humana and ETF Series

-0.62

Correlation Coefficient

Humana  ETF Series

Excellent diversification

The 3 months correlation between Humana and ETF is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Humana i.e., Humana and ETF Series go up and down completely randomly.

Pair Corralation between Humana and ETF Series

Considering the 90-day investment horizon Humana Inc is expected to under-perform the ETF Series. In addition to that, Humana is 25.77 times more volatile than ETF Series Solutions. It trades about -0.07 of its total potential returns per unit of risk. ETF Series Solutions is currently generating about 0.19 per unit of volatility. If you would invest  2,491  in ETF Series Solutions on August 30, 2024 and sell it today you would earn a total of  39.00  from holding ETF Series Solutions or generate 1.57% 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.  ETF Series Solutions

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 December 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.

ETF Series Solutions

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, ETF Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Humana and ETF Series

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

The idea behind Humana Inc and ETF Series Solutions 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 Transaction History module to view history of all your transactions and understand their impact on performance.