Correlation Between Federated High and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Federated High 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 Federated High and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated High Yield and Massmutual Select Mid, you can compare the effects of market volatilities on Federated High 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 Federated High with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Massmutual Select.
Diversification Opportunities for Federated High and Massmutual Select
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Massmutual is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and Massmutual Select Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Mid and Federated High 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 Federated High Yield 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 Mid has no effect on the direction of Federated High i.e., Federated High and Massmutual Select go up and down completely randomly.
Pair Corralation between Federated High and Massmutual Select
Assuming the 90 days horizon Federated High is expected to generate 1.21 times less return on investment than Massmutual Select. But when comparing it to its historical volatility, Federated High Yield is 2.63 times less risky than Massmutual Select. It trades about 0.11 of its potential returns per unit of risk. Massmutual Select Mid is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,154 in Massmutual Select Mid on August 27, 2024 and sell it today you would earn a total of 209.00 from holding Massmutual Select Mid or generate 18.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated High Yield vs. Massmutual Select Mid
Performance |
| Timeline |
| Federated High Yield |
| Massmutual Select Mid |
Federated High and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Massmutual Select
The main advantage of trading using opposite Federated High and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High 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.| Federated High vs. Janus High Yield Fund | Federated High vs. Northeast Investors Trust | Federated High vs. High Yield Fund Investor | Federated High vs. Ab Sustainable Thematic |
| Massmutual Select vs. Massmutual Select Mid Cap | Massmutual Select vs. Massmutual Select Mid Cap | Massmutual Select vs. Massmutual Select Growth | Massmutual Select vs. Massmutual Premier Balanced |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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