Correlation Between National Tax and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both National Tax 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 National Tax and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Massmutual Select Blue, you can compare the effects of market volatilities on National Tax 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 National Tax with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Tax and Massmutual Select.
Diversification Opportunities for National Tax and Massmutual Select
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Massmutual is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Massmutual Select Blue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Blue and National Tax 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 The National Tax Free 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 Blue has no effect on the direction of National Tax i.e., National Tax and Massmutual Select go up and down completely randomly.
Pair Corralation between National Tax and Massmutual Select
Assuming the 90 days horizon National Tax is expected to generate 7.18 times less return on investment than Massmutual Select. But when comparing it to its historical volatility, The National Tax Free is 6.85 times less risky than Massmutual Select. It trades about 0.11 of its potential returns per unit of risk. Massmutual Select Blue is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,207 in Massmutual Select Blue on September 15, 2024 and sell it today you would earn a total of 52.00 from holding Massmutual Select Blue or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
The National Tax Free vs. Massmutual Select Blue
Performance |
| Timeline |
| National Tax |
| Massmutual Select Blue |
National Tax and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Tax and Massmutual Select
The main advantage of trading using opposite National Tax and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Tax 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.| National Tax vs. The Missouri Tax Free | National Tax vs. The Bond Fund | National Tax vs. High Yield Municipal Fund | National Tax vs. Fidelity Intermediate Municipal |
| Massmutual Select vs. Franklin High Yield | Massmutual Select vs. Dws Government Money | Massmutual Select vs. T Rowe Price | Massmutual Select vs. The National Tax Free |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |