Correlation Between HUMANA and Moog

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

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

Diversification Opportunities for HUMANA and Moog

-0.51

Correlation Coefficient

HUMANA  Moog

Excellent diversification

The 3 months correlation between HUMANA and Moog is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc 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 Moog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moog Inc has no effect on the direction of HUMANA i.e., HUMANA and Moog go up and down completely randomly.

Pair Corralation between HUMANA and Moog

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Moog. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 3.43 times less risky than Moog. The bond trades about -0.09 of its potential returns per unit of risk. The Moog Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  18,671  in Moog Inc on September 3, 2024 and sell it today you would earn a total of  3,456  from holding Moog Inc or generate 18.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

HUMANA INC  vs.  Moog Inc

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 somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Moog Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Moog Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Moog sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and Moog

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

The idea behind HUMANA INC and Moog Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.