Correlation Between MSA Safety and HUMANA

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

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

Diversification Opportunities for MSA Safety and HUMANA

0.23

Correlation Coefficient

MSA Safety  HUMANA

Modest diversification

The 3 months correlation between MSA and HUMANA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and MSA Safety 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 MSA Safety 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 MSA Safety i.e., MSA Safety and HUMANA go up and down completely randomly.

Pair Corralation between MSA Safety and HUMANA

Considering the 90-day investment horizon MSA Safety is expected to generate 1.54 times more return on investment than HUMANA. However, MSA Safety is 1.54 times more volatile than HUMANA INC. It trades about 0.01 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.16 per unit of risk. If you would invest  17,350  in MSA Safety on September 4, 2024 and sell it today you would earn a total of  118.00  from holding MSA Safety or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

MSA Safety  vs.  HUMANA INC

MSA Safety

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MSA Safety are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MSA Safety is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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. Despite latest unfluctuating 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.

Pair Trading with MSA Safety and HUMANA

The main advantage of trading using opposite MSA Safety and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSA Safety 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 MSA Safety 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 Stocks Directory module to find actively traded stocks across global markets.