Correlation Between Humana and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Humana and Direxion Daily 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 Daily 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 Daily SP500, you can compare the effects of market volatilities on Humana and Direxion Daily 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 Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Direxion Daily.
Diversification Opportunities for Humana and Direxion Daily
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Humana and Direxion is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Direxion Daily SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP500 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 Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily SP500 has no effect on the direction of Humana i.e., Humana and Direxion Daily go up and down completely randomly.
Pair Corralation between Humana and Direxion Daily
Considering the 90-day investment horizon Humana Inc is expected to generate 1.23 times more return on investment than Direxion Daily. However, Humana is 1.23 times more volatile than Direxion Daily SP500. It trades about 0.21 of its potential returns per unit of risk. Direxion Daily SP500 is currently generating about 0.12 per unit of risk. If you would invest 26,109 in Humana Inc on August 27, 2024 and sell it today you would earn a total of 3,702 from holding Humana Inc or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. Direxion Daily SP500
Performance |
| Timeline |
| Humana Inc |
| Direxion Daily SP500 |
Humana and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Direxion Daily
The main advantage of trading using opposite Humana and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Direxion Daily 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 Daily will offset losses from the drop in Direxion Daily's long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily Small | Direxion Daily vs. Direxion Daily Semiconductor |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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