Correlation Between Teradyne and HUMANA

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

By analyzing existing cross correlation between Teradyne and HUMANA INC 395, you can compare the effects of market volatilities on Teradyne 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 Teradyne with a short position of HUMANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and HUMANA.

Diversification Opportunities for Teradyne and HUMANA

0.22

Correlation Coefficient

Teradyne  HUMANA

Modest diversification

The 3 months correlation between Teradyne and HUMANA is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and HUMANA INC 395 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC 5 and Teradyne 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 Teradyne 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 5 has no effect on the direction of Teradyne i.e., Teradyne and HUMANA go up and down completely randomly.

Pair Corralation between Teradyne and HUMANA

Considering the 90-day investment horizon Teradyne is expected to under-perform the HUMANA. In addition to that, Teradyne is 11.87 times more volatile than HUMANA INC 395. It trades about -0.02 of its total potential returns per unit of risk. HUMANA INC 395 is currently generating about 0.02 per unit of volatility. If you would invest  9,688  in HUMANA INC 395 on September 15, 2024 and sell it today you would earn a total of  73.00  from holding HUMANA INC 395 or generate 0.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Teradyne  vs.  HUMANA INC 395

Teradyne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teradyne has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Teradyne is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

HUMANA INC 5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC 395 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Teradyne and HUMANA

The main advantage of trading using opposite Teradyne and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne 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 Teradyne and HUMANA INC 395 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.