Correlation Between ProShares UltraShort and HUMANA

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

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

Diversification Opportunities for ProShares UltraShort and HUMANA

0.23

Correlation Coefficient

ProShares UltraShort  HUMANA

Modest diversification

The 3 months correlation between ProShares and HUMANA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Utilities and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and ProShares UltraShort 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 ProShares UltraShort Utilities are associated (or correlated) with HUMANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUMANA INC has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and HUMANA go up and down completely randomly.

Pair Corralation between ProShares UltraShort and HUMANA

Considering the 90-day investment horizon ProShares UltraShort Utilities is expected to under-perform the HUMANA. But the etf apears to be less risky and, when comparing its historical volatility, ProShares UltraShort Utilities is 1.07 times less risky than HUMANA. The etf trades about -0.16 of its potential returns per unit of risk. The HUMANA INC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,939  in HUMANA INC on February 3, 2024 and sell it today you would earn a total of  157.00  from holding HUMANA INC or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

ProShares UltraShort Utilities  vs.  HUMANA INC

ProShares UltraShort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraShort Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Etf's fundamental indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

HUMANA INC

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares UltraShort and HUMANA

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

The idea behind ProShares UltraShort Utilities and HUMANA 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.