Correlation Between HUMANA and Embrace Change

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

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

Diversification Opportunities for HUMANA and Embrace Change

0.31

Correlation Coefficient

HUMANA  Embrace Change

Weak diversification

The 3 months correlation between HUMANA and Embrace is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Embrace Change Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embrace Change Acqui 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 Embrace Change. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embrace Change Acqui has no effect on the direction of HUMANA i.e., HUMANA and Embrace Change go up and down completely randomly.

Pair Corralation between HUMANA and Embrace Change

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Embrace Change. In addition to that, HUMANA is 1.08 times more volatile than Embrace Change Acquisition. It trades about -0.15 of its total potential returns per unit of risk. Embrace Change Acquisition is currently generating about -0.05 per unit of volatility. If you would invest  1,197  in Embrace Change Acquisition on September 2, 2024 and sell it today you would lose (32.00) from holding Embrace Change Acquisition or give up 2.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

HUMANA INC  vs.  Embrace Change Acquisition

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.

Embrace Change Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embrace Change Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Embrace Change is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HUMANA and Embrace Change

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

The idea behind HUMANA INC and Embrace Change Acquisition 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.