Correlation Between Axon Enterprise and Humana

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

By analyzing existing cross correlation between Axon Enterprise and Humana Inc, you can compare the effects of market volatilities on Axon Enterprise 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 Axon Enterprise with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axon Enterprise and Humana.

Diversification Opportunities for Axon Enterprise and Humana

-0.27

Correlation Coefficient

Axon Enterprise  Humana

Very good diversification

The 3 months correlation between Axon and Humana is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Axon Enterprise and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Axon Enterprise 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 Axon Enterprise 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 Axon Enterprise i.e., Axon Enterprise and Humana go up and down completely randomly.

Pair Corralation between Axon Enterprise and Humana

Assuming the 90 days trading horizon Axon Enterprise is expected to generate 1.13 times more return on investment than Humana. However, Axon Enterprise is 1.13 times more volatile than Humana Inc. It trades about 0.25 of its potential returns per unit of risk. Humana Inc is currently generating about -0.06 per unit of risk. If you would invest  36,341  in Axon Enterprise on September 1, 2024 and sell it today you would earn a total of  28,411  from holding Axon Enterprise or generate 78.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Axon Enterprise  vs.  Humana Inc

Axon Enterprise

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axon Enterprise are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Axon Enterprise unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Axon Enterprise and Humana

The main advantage of trading using opposite Axon Enterprise and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axon Enterprise 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 Axon Enterprise 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.