Correlation Between American Balanced and Massmutual Premier
Can any of the company-specific risk be diversified away by investing in both American Balanced and Massmutual Premier 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 American Balanced and Massmutual Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Massmutual Premier Balanced, you can compare the effects of market volatilities on American Balanced and Massmutual Premier 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 American Balanced with a short position of Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Massmutual Premier.
Diversification Opportunities for American Balanced and Massmutual Premier
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Massmutual is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Massmutual Premier Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier and American Balanced 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 American Balanced are associated (or correlated) with Massmutual Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Premier has no effect on the direction of American Balanced i.e., American Balanced and Massmutual Premier go up and down completely randomly.
Pair Corralation between American Balanced and Massmutual Premier
Assuming the 90 days horizon American Balanced is expected to generate 1.35 times less return on investment than Massmutual Premier. In addition to that, American Balanced is 1.1 times more volatile than Massmutual Premier Balanced. It trades about 0.31 of its total potential returns per unit of risk. Massmutual Premier Balanced is currently generating about 0.45 per unit of volatility. If you would invest 1,203 in Massmutual Premier Balanced on September 4, 2024 and sell it today you would earn a total of 49.00 from holding Massmutual Premier Balanced or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Balanced vs. Massmutual Premier Balanced
Performance |
| Timeline |
| American Balanced |
| Massmutual Premier |
American Balanced and Massmutual Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Massmutual Premier
The main advantage of trading using opposite American Balanced and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Massmutual Premier 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 Premier will offset losses from the drop in Massmutual Premier's long position.| American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
| Massmutual Premier vs. Massmutual Select Mid | Massmutual Premier vs. Massmutual Select Mid Cap | Massmutual Premier vs. Massmutual Select Mid Cap | Massmutual Premier vs. Massmutual Select Mid Cap |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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