Correlation Between Humana and Nuveen SP

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

By analyzing existing cross correlation between Humana Inc and Nuveen SP 500, you can compare the effects of market volatilities on Humana and Nuveen SP 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 Nuveen SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Nuveen SP.

Diversification Opportunities for Humana and Nuveen SP

0.02

Correlation Coefficient

Humana  Nuveen SP

Significant diversification

The 3 months correlation between Humana and Nuveen is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Nuveen SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen SP 500 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 Nuveen SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen SP 500 has no effect on the direction of Humana i.e., Humana and Nuveen SP go up and down completely randomly.

Pair Corralation between Humana and Nuveen SP

Considering the 90-day investment horizon Humana Inc is expected to generate 2.34 times more return on investment than Nuveen SP. However, Humana is 2.34 times more volatile than Nuveen SP 500. It trades about 0.11 of its potential returns per unit of risk. Nuveen SP 500 is currently generating about -0.24 per unit of risk. If you would invest  30,433  in Humana Inc on February 2, 2024 and sell it today you would earn a total of  1,113  from holding Humana Inc or generate 3.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Humana Inc  vs.  Nuveen SP 500

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. In spite of abnormal performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Nuveen SP 500

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen SP 500 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Nuveen SP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Humana and Nuveen SP

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

The idea behind Humana Inc and Nuveen SP 500 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.