Correlation Between Harbor Health and Direxion Daily

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

By analyzing existing cross correlation between Harbor Health Care and Direxion Daily SP, you can compare the effects of market volatilities on Harbor Health 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 Harbor Health with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Health and Direxion Daily.

Diversification Opportunities for Harbor Health and Direxion Daily

-0.07

Correlation Coefficient

Harbor Health  Direxion Daily

Good diversification

The 3 months correlation between Harbor and Direxion is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Health Care and Direxion Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP and Harbor Health 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 Harbor Health Care 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 SP has no effect on the direction of Harbor Health i.e., Harbor Health and Direxion Daily go up and down completely randomly.

Pair Corralation between Harbor Health and Direxion Daily

Given the investment horizon of 90 days Harbor Health Care is expected to generate 0.44 times more return on investment than Direxion Daily. However, Harbor Health Care is 2.26 times less risky than Direxion Daily. It trades about 0.06 of its potential returns per unit of risk. Direxion Daily SP is currently generating about -0.01 per unit of risk. If you would invest  2,480  in Harbor Health Care on December 29, 2024 and sell it today you would earn a total of  113.00  from holding Harbor Health Care or generate 4.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Harbor Health Care  vs.  Direxion Daily SP

Harbor Health Care

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Health Care are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Harbor Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Direxion Daily SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily SP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Direxion Daily is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Harbor Health and Direxion Daily

The main advantage of trading using opposite Harbor Health and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Health 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.

The idea behind Harbor Health Care and Direxion Daily SP 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.