Correlation Between Sweetgreen and HUMANA

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

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

Diversification Opportunities for Sweetgreen and HUMANA

-0.32

Correlation Coefficient

Sweetgreen  HUMANA

Very good diversification

The 3 months correlation between Sweetgreen and HUMANA is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Sweetgreen 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 Sweetgreen 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 Sweetgreen i.e., Sweetgreen and HUMANA go up and down completely randomly.

Pair Corralation between Sweetgreen and HUMANA

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 14.5 times less return on investment than HUMANA. But when comparing it to its historical volatility, Sweetgreen is 17.0 times less risky than HUMANA. It trades about 0.08 of its potential returns per unit of risk. HUMANA INC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,862  in HUMANA INC on September 19, 2024 and sell it today you would lose (167.00) from holding HUMANA INC or give up 2.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.34%
Values	Daily Returns

Sweetgreen  vs.  HUMANA INC

Sweetgreen

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sweetgreen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Sweetgreen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 weak 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 Sweetgreen and HUMANA

The main advantage of trading using opposite Sweetgreen and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen 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 Sweetgreen 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.