Correlation Between HUMANA and Massmutual Select

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Can any of the company-specific risk be diversified away by investing in both HUMANA and Massmutual Select 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 Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUMANA INC and Massmutual Select Total, you can compare the effects of market volatilities on HUMANA and Massmutual Select 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 Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Massmutual Select.

Diversification Opportunities for HUMANA and Massmutual Select

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between HUMANA and Massmutual is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Massmutual Select Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Total 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 Massmutual Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Select Total has no effect on the direction of HUMANA i.e., HUMANA and Massmutual Select go up and down completely randomly.

Pair Corralation between HUMANA and Massmutual Select

Assuming the 90 days trading horizon HUMANA INC is expected to generate 180.93 times more return on investment than Massmutual Select. However, HUMANA is 180.93 times more volatile than Massmutual Select Total. It trades about 0.07 of its potential returns per unit of risk. Massmutual Select Total is currently generating about 0.03 per unit of risk. If you would invest  7,980  in HUMANA INC on September 1, 2024 and sell it today you would lose (285.00) from holding HUMANA INC or give up 3.57% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy94.3%
ValuesDaily Returns

HUMANA INC  vs.  Massmutual Select Total

 Performance 
       Timeline  
HUMANA INC 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.
Massmutual Select Total 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Massmutual Select Total has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Massmutual Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HUMANA and Massmutual Select Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HUMANA and Massmutual Select

The main advantage of trading using opposite HUMANA and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Massmutual Select 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 Massmutual Select will offset losses from the drop in Massmutual Select's long position.
The idea behind HUMANA INC and Massmutual Select Total 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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