Correlation Between HUMANA and Bald Eagle

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

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

Diversification Opportunities for HUMANA and Bald Eagle

0.53

Correlation Coefficient

HUMANA  Bald Eagle

Very weak diversification

The 3 months correlation between HUMANA and Bald is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Bald Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bald Eagle Gold 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 Bald Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bald Eagle Gold has no effect on the direction of HUMANA i.e., HUMANA and Bald Eagle go up and down completely randomly.

Pair Corralation between HUMANA and Bald Eagle

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.16 times more return on investment than Bald Eagle. However, HUMANA INC is 6.33 times less risky than Bald Eagle. It trades about -0.15 of its potential returns per unit of risk. Bald Eagle Gold is currently generating about -0.04 per unit of risk. If you would invest  8,325  in HUMANA INC on August 31, 2024 and sell it today you would lose (630.00) from holding HUMANA INC or give up 7.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

HUMANA INC  vs.  Bald Eagle Gold

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 unsteady 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.

Bald Eagle Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bald Eagle Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with HUMANA and Bald Eagle

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

The idea behind HUMANA INC and Bald Eagle Gold 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.