Correlation Between Humana and Direxion
Can any of the company-specific risk be diversified away by investing in both Humana and Direxion 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 Direxion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Direxion, you can compare the effects of market volatilities on Humana and Direxion 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 Direxion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Direxion.
Diversification Opportunities for Humana and Direxion
Excellent diversification
The 3 months correlation between Humana and Direxion is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Direxion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion 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 Direxion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion has no effect on the direction of Humana i.e., Humana and Direxion go up and down completely randomly.
Pair Corralation between Humana and Direxion
Considering the 90-day investment horizon Humana Inc is expected to under-perform the Direxion. In addition to that, Humana is 1.22 times more volatile than Direxion. It trades about -0.06 of its total potential returns per unit of risk. Direxion is currently generating about -0.03 per unit of volatility. If you would invest 1,272 in Direxion on September 12, 2024 and sell it today you would lose (192.00) from holding Direxion or give up 15.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 69.79% |
| Values | Daily Returns |
Humana Inc vs. Direxion
Performance |
| Timeline |
| Humana Inc |
| Direxion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Humana and Direxion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Direxion
The main advantage of trading using opposite Humana and Direxion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Direxion 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 Direxion will offset losses from the drop in Direxion's long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| Direxion vs. Global X Hydrogen | Direxion vs. Defiance Next Gen | Direxion vs. Fusion Fuel Green | Direxion vs. Amplify Lithium Battery |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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