Correlation Between HUMANA and Amg Gwk

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

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

Diversification Opportunities for HUMANA and Amg Gwk

-0.53

Correlation Coefficient

HUMANA  Amg Gwk

Excellent diversification

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

Pair Corralation between HUMANA and Amg Gwk

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Amg Gwk. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 1.54 times less risky than Amg Gwk. The bond trades about -0.15 of its potential returns per unit of risk. The Amg Gwk Small is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,279  in Amg Gwk Small on September 2, 2024 and sell it today you would earn a total of  438.00  from holding Amg Gwk Small or generate 13.36% return on investment over 90 days.

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

HUMANA INC  vs.  Amg Gwk Small

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.

Amg Gwk Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Gwk Small are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Amg Gwk showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and Amg Gwk

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

The idea behind HUMANA INC and Amg Gwk Small 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.