Correlation Between HUMANA and Mitsubishi Electric

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

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

Diversification Opportunities for HUMANA and Mitsubishi Electric

-0.17

Correlation Coefficient

HUMANA  Mitsubishi Electric

Good diversification

The 3 months correlation between HUMANA and Mitsubishi is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Mitsubishi Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric 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 Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric Corp has no effect on the direction of HUMANA i.e., HUMANA and Mitsubishi Electric go up and down completely randomly.

Pair Corralation between HUMANA and Mitsubishi Electric

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Mitsubishi Electric. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 3.8 times less risky than Mitsubishi Electric. The bond trades about 0.0 of its potential returns per unit of risk. The Mitsubishi Electric Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,735  in Mitsubishi Electric Corp on September 14, 2024 and sell it today you would earn a total of  793.00  from holding Mitsubishi Electric Corp or generate 28.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.39%
Values	Daily Returns

HUMANA INC  vs.  Mitsubishi Electric 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 inconsistent 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.

Mitsubishi Electric Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Electric Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Mitsubishi Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HUMANA and Mitsubishi Electric

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

The idea behind HUMANA INC and Mitsubishi Electric 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.