Correlation Between American Funds and Massmutual Retiresmart
Can any of the company-specific risk be diversified away by investing in both American Funds and Massmutual Retiresmart 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 Funds and Massmutual Retiresmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2045 and Massmutual Retiresmart 2045, you can compare the effects of market volatilities on American Funds and Massmutual Retiresmart 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 Funds with a short position of Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Massmutual Retiresmart.
Diversification Opportunities for American Funds and Massmutual Retiresmart
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between AMERICAN and Massmutual is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2045 and Massmutual Retiresmart 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart and American Funds 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 Funds 2045 are associated (or correlated) with Massmutual Retiresmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Retiresmart has no effect on the direction of American Funds i.e., American Funds and Massmutual Retiresmart go up and down completely randomly.
Pair Corralation between American Funds and Massmutual Retiresmart
Assuming the 90 days horizon American Funds 2045 is expected to generate 1.06 times more return on investment than Massmutual Retiresmart. However, American Funds is 1.06 times more volatile than Massmutual Retiresmart 2045. It trades about 0.11 of its potential returns per unit of risk. Massmutual Retiresmart 2045 is currently generating about 0.11 per unit of risk. If you would invest 2,009 in American Funds 2045 on September 2, 2024 and sell it today you would earn a total of 198.00 from holding American Funds 2045 or generate 9.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2045 vs. Massmutual Retiresmart 2045
Performance |
| Timeline |
| American Funds 2045 |
| Massmutual Retiresmart |
American Funds and Massmutual Retiresmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Massmutual Retiresmart
The main advantage of trading using opposite American Funds and Massmutual Retiresmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Massmutual Retiresmart 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 Retiresmart will offset losses from the drop in Massmutual Retiresmart's long position.| American Funds vs. Legg Mason Partners | American Funds vs. Dws Government Money | American Funds vs. Lord Abbett Govt | American Funds vs. Bbh Trust |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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