Correlation Between SPDR Portfolio and HUMANA

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

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

Diversification Opportunities for SPDR Portfolio and HUMANA

0.41

Correlation Coefficient

SPDR Portfolio  HUMANA

Very weak diversification

The 3 months correlation between SPDR and HUMANA is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Aggregate and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and SPDR Portfolio 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 SPDR Portfolio Aggregate 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 SPDR Portfolio i.e., SPDR Portfolio and HUMANA go up and down completely randomly.

Pair Corralation between SPDR Portfolio and HUMANA

Given the investment horizon of 90 days SPDR Portfolio Aggregate is expected to generate 0.38 times more return on investment than HUMANA. However, SPDR Portfolio Aggregate is 2.64 times less risky than HUMANA. It trades about -0.1 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.18 per unit of risk. If you would invest  2,602  in SPDR Portfolio Aggregate on September 13, 2024 and sell it today you would lose (49.00) from holding SPDR Portfolio Aggregate or give up 1.88% of portfolio value over 90 days.

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

SPDR Portfolio Aggregate  vs.  HUMANA INC

SPDR Portfolio Aggregate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Portfolio Aggregate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SPDR Portfolio is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 SPDR Portfolio and HUMANA

The main advantage of trading using opposite SPDR Portfolio and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio 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 SPDR Portfolio Aggregate 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.