Correlation Between American Funds and Massmutual Premier
Can any of the company-specific risk be diversified away by investing in both American Funds 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 Funds 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 Funds American and Massmutual Premier Disciplined, you can compare the effects of market volatilities on American Funds 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 Funds with a short position of Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Massmutual Premier.
Diversification Opportunities for American Funds and Massmutual Premier
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Massmutual is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Massmutual Premier Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier 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 American 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 Funds i.e., American Funds and Massmutual Premier go up and down completely randomly.
Pair Corralation between American Funds and Massmutual Premier
Assuming the 90 days horizon American Funds American is expected to generate 0.8 times more return on investment than Massmutual Premier. However, American Funds American is 1.26 times less risky than Massmutual Premier. It trades about -0.07 of its potential returns per unit of risk. Massmutual Premier Disciplined is currently generating about -0.15 per unit of risk. If you would invest 5,978 in American Funds American on September 13, 2024 and sell it today you would lose (41.00) from holding American Funds American or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Massmutual Premier Disciplined
Performance |
| Timeline |
| American Funds American |
| Massmutual Premier |
American Funds and Massmutual Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Massmutual Premier
The main advantage of trading using opposite American Funds and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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 Funds vs. Jhancock Diversified Macro | American Funds vs. Pgim Jennison Diversified | American Funds vs. Delaware Limited Term Diversified | American Funds vs. Tiaa Cref Small Cap Blend |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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