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 Transportation, 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
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Humana and Direxion is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Direxion Daily Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Trans 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 Trans 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 under-perform the Direxion Daily. But the etf apears to be less risky and, when comparing its historical volatility, Humana Inc is 1.43 times less risky than Direxion Daily. The etf trades about -0.06 of its potential returns per unit of risk. The Direxion Daily Transportation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,150 in Direxion Daily Transportation on September 1, 2024 and sell it today you would earn a total of 1,879 from holding Direxion Daily Transportation or generate 87.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. Direxion Daily Transportation
Performance |
| Timeline |
| Humana Inc |
| Direxion Daily Trans |
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 Industrials | Direxion Daily vs. Direxion Daily Utilities | Direxion Daily vs. Direxion Daily Cnsmr | Direxion Daily vs. Direxion Daily Retail |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |