Correlation Between Humana and T Rex

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

By analyzing existing cross correlation between Humana Inc and T Rex 2X Inverse, you can compare the effects of market volatilities on Humana and T Rex 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 T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and T Rex.

Diversification Opportunities for Humana and T Rex

-0.31

Correlation Coefficient

Humana  T Rex

Very good diversification

The 3 months correlation between Humana and ETQ is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and T Rex 2X Inverse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X 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 T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of Humana i.e., Humana and T Rex go up and down completely randomly.

Pair Corralation between Humana and T Rex

Considering the 90-day investment horizon Humana Inc is expected to generate 0.28 times more return on investment than T Rex. However, Humana Inc is 3.52 times less risky than T Rex. It trades about 0.21 of its potential returns per unit of risk. T Rex 2X Inverse is currently generating about -0.39 per unit of risk. If you would invest  25,555  in Humana Inc on September 5, 2024 and sell it today you would earn a total of  3,558  from holding Humana Inc or generate 13.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Humana Inc  vs.  T Rex 2X Inverse

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 January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

T Rex 2X

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Rex 2X Inverse has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with Humana and T Rex

The main advantage of trading using opposite Humana and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, T Rex 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 T Rex will offset losses from the drop in T Rex's long position.

The idea behind Humana Inc and T Rex 2X Inverse 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.