Correlation Between HUMANA and Arista Power

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

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

Diversification Opportunities for HUMANA and Arista Power

0.0

Correlation Coefficient

HUMANA  Arista Power

Pay attention - limited upside

The 3 months correlation between HUMANA and Arista is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Arista Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arista Power 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 Arista Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arista Power has no effect on the direction of HUMANA i.e., HUMANA and Arista Power go up and down completely randomly.

Pair Corralation between HUMANA and Arista Power

If you would invest  7,891  in HUMANA INC on September 12, 2024 and sell it today you would lose (196.00) from holding HUMANA INC or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.01%
Values	Daily Returns

HUMANA INC  vs.  Arista Power

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.

Arista Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arista Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Arista Power is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HUMANA and Arista Power

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

The idea behind HUMANA INC and Arista Power 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.