Correlation Between HUMANA and Growlife

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

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

Diversification Opportunities for HUMANA and Growlife

0.17

Correlation Coefficient

HUMANA  Growlife

Average diversification

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

Pair Corralation between HUMANA and Growlife

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Growlife. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 78.71 times less risky than Growlife. The bond trades about -0.19 of its potential returns per unit of risk. The Growlife is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Growlife on September 20, 2024 and sell it today you would lose (0.03) from holding Growlife or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

HUMANA INC  vs.  Growlife

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 unsteady 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.

Growlife

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Growlife are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Growlife unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and Growlife

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

The idea behind HUMANA INC and Growlife 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.