Correlation Between HUMANA and GMV Minerals

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

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

Diversification Opportunities for HUMANA and GMV Minerals

-0.07

Correlation Coefficient

HUMANA  GMV Minerals

Good diversification

The 3 months correlation between HUMANA and GMV is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and GMV Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMV Minerals 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 GMV Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMV Minerals has no effect on the direction of HUMANA i.e., HUMANA and GMV Minerals go up and down completely randomly.

Pair Corralation between HUMANA and GMV Minerals

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the GMV Minerals. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 11.53 times less risky than GMV Minerals. The bond trades about -0.17 of its potential returns per unit of risk. The GMV Minerals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8.98  in GMV Minerals on September 15, 2024 and sell it today you would lose (0.16) from holding GMV Minerals or give up 1.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

HUMANA INC  vs.  GMV Minerals

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.

GMV Minerals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GMV Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, GMV Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and GMV Minerals

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

The idea behind HUMANA INC and GMV Minerals 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.