Correlation Between International Consolidated and HUMANA

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

By analyzing existing cross correlation between International Consolidated Airlines and HUMANA INC, you can compare the effects of market volatilities on International Consolidated and HUMANA 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 International Consolidated with a short position of HUMANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and HUMANA.

Diversification Opportunities for International Consolidated and HUMANA

-0.41

Correlation Coefficient

International Consolidated  HUMANA

Very good diversification

The 3 months correlation between International and HUMANA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with HUMANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUMANA INC has no effect on the direction of International Consolidated i.e., International Consolidated and HUMANA go up and down completely randomly.

Pair Corralation between International Consolidated and HUMANA

Assuming the 90 days horizon International Consolidated Airlines is expected to generate 2.25 times more return on investment than HUMANA. However, International Consolidated is 2.25 times more volatile than HUMANA INC. It trades about 0.32 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.18 per unit of risk. If you would invest  518.00  in International Consolidated Airlines on September 13, 2024 and sell it today you would earn a total of  223.00  from holding International Consolidated Airlines or generate 43.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

International Consolidated Air  vs.  HUMANA INC

International Consolidated

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, International Consolidated showed solid returns over the last few months and may actually be approaching a breakup point.

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. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

Pair Trading with International Consolidated and HUMANA

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

The idea behind International Consolidated Airlines and HUMANA INC 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.