Correlation Between HUMANA and Falcon Gold

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

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

Diversification Opportunities for HUMANA and Falcon Gold

0.34

Correlation Coefficient

HUMANA  Falcon Gold

Weak diversification

The 3 months correlation between HUMANA and Falcon is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Falcon Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Gold Corp 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 Falcon Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Gold Corp has no effect on the direction of HUMANA i.e., HUMANA and Falcon Gold go up and down completely randomly.

Pair Corralation between HUMANA and Falcon Gold

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Falcon Gold. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 12.48 times less risky than Falcon Gold. The bond trades about -0.17 of its potential returns per unit of risk. The Falcon Gold Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3.25  in Falcon Gold Corp on September 15, 2024 and sell it today you would lose (0.93) from holding Falcon Gold Corp or give up 28.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

HUMANA INC  vs.  Falcon Gold Corp

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.

Falcon Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Falcon Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HUMANA and Falcon Gold

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

The idea behind HUMANA INC and Falcon Gold Corp 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 Stocks Directory module to find actively traded stocks across global markets.