Correlation Between MASSMU and PVH Corp

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

By analyzing existing cross correlation between MASSMU 5672 01 DEC 52 and PVH Corp, you can compare the effects of market volatilities on MASSMU and PVH Corp 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 MASSMU with a short position of PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of MASSMU and PVH Corp.

Diversification Opportunities for MASSMU and PVH Corp

-0.02

Correlation Coefficient

MASSMU  PVH Corp

Good diversification

The 3 months correlation between MASSMU and PVH is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding MASSMU 5672 01 DEC 52 and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp and MASSMU 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 MASSMU 5672 01 DEC 52 are associated (or correlated) with PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of MASSMU i.e., MASSMU and PVH Corp go up and down completely randomly.

Pair Corralation between MASSMU and PVH Corp

Assuming the 90 days trading horizon MASSMU 5672 01 DEC 52 is expected to generate 2.03 times more return on investment than PVH Corp. However, MASSMU is 2.03 times more volatile than PVH Corp. It trades about 0.12 of its potential returns per unit of risk. PVH Corp is currently generating about 0.03 per unit of risk. If you would invest  9,979  in MASSMU 5672 01 DEC 52 on September 27, 2024 and sell it today you would earn a total of  420.00  from holding MASSMU 5672 01 DEC 52 or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

MASSMU 5672 01 DEC 52  vs.  PVH Corp

MASSMU 5672 01

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MASSMU 5672 01 DEC 52 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MASSMU is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

PVH Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PVH Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, PVH Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MASSMU and PVH Corp

The main advantage of trading using opposite MASSMU and PVH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MASSMU position performs unexpectedly, PVH Corp 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 PVH Corp will offset losses from the drop in PVH Corp's long position.

The idea behind MASSMU 5672 01 DEC 52 and PVH Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.