Correlation Between Humana and ProShares Ultra

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

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

Diversification Opportunities for Humana and ProShares Ultra

-0.33

Correlation Coefficient

Humana  ProShares Ultra

Very good diversification

The 3 months correlation between Humana and ProShares is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and ProShares Ultra Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Fina 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 ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Fina has no effect on the direction of Humana i.e., Humana and ProShares Ultra go up and down completely randomly.

Pair Corralation between Humana and ProShares Ultra

Considering the 90-day investment horizon Humana Inc is expected to under-perform the ProShares Ultra. In addition to that, Humana is 1.48 times more volatile than ProShares Ultra Financials. It trades about -0.07 of its total potential returns per unit of risk. ProShares Ultra Financials is currently generating about 0.16 per unit of volatility. If you would invest  7,781  in ProShares Ultra Financials on August 30, 2024 and sell it today you would earn a total of  1,867  from holding ProShares Ultra Financials or generate 23.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Humana Inc  vs.  ProShares Ultra Financials

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.

ProShares Ultra Fina

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Financials are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ProShares Ultra reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humana and ProShares Ultra

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

The idea behind Humana Inc and ProShares Ultra Financials 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.