Correlation Between HUMANA and Armada Hoffler

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

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

Diversification Opportunities for HUMANA and Armada Hoffler

-0.1

Correlation Coefficient

HUMANA  Armada Hoffler

Good diversification

The 3 months correlation between HUMANA and Armada is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Armada Hoffler Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Hoffler Properties 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 Armada Hoffler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Hoffler Properties has no effect on the direction of HUMANA i.e., HUMANA and Armada Hoffler go up and down completely randomly.

Pair Corralation between HUMANA and Armada Hoffler

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Armada Hoffler. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 1.28 times less risky than Armada Hoffler. The bond trades about -0.18 of its potential returns per unit of risk. The Armada Hoffler Properties is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,237  in Armada Hoffler Properties on September 12, 2024 and sell it today you would earn a total of  106.00  from holding Armada Hoffler Properties or generate 4.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

HUMANA INC  vs.  Armada Hoffler Properties

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.

Armada Hoffler Properties

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Hoffler Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Armada Hoffler is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and Armada Hoffler

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

The idea behind HUMANA INC and Armada Hoffler Properties 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .