Correlation Between Humana and WisdomTree Cybersecurity

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

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

Diversification Opportunities for Humana and WisdomTree Cybersecurity

-0.11

Correlation Coefficient

Humana  WisdomTree Cybersecurity

Good diversification

The 3 months correlation between Humana and WisdomTree is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and WisdomTree Cybersecurity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Cybersecurity 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 WisdomTree Cybersecurity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Cybersecurity has no effect on the direction of Humana i.e., Humana and WisdomTree Cybersecurity go up and down completely randomly.

Pair Corralation between Humana and WisdomTree Cybersecurity

Considering the 90-day investment horizon Humana Inc is expected to under-perform the WisdomTree Cybersecurity. In addition to that, Humana is 2.13 times more volatile than WisdomTree Cybersecurity. It trades about -0.04 of its total potential returns per unit of risk. WisdomTree Cybersecurity is currently generating about 0.21 per unit of volatility. If you would invest  2,465  in WisdomTree Cybersecurity on September 13, 2024 and sell it today you would earn a total of  509.00  from holding WisdomTree Cybersecurity or generate 20.65% 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.  WisdomTree Cybersecurity

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 latest abnormal performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

WisdomTree Cybersecurity

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Cybersecurity are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, WisdomTree Cybersecurity reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humana and WisdomTree Cybersecurity

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

The idea behind Humana Inc and WisdomTree Cybersecurity 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.