Correlation Between Financial Industries and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Financial Industries 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 Financial Industries and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Massmutual Select T, you can compare the effects of market volatilities on Financial Industries 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 Financial Industries with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Massmutual Select.
Diversification Opportunities for Financial Industries and Massmutual Select
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Financial and Massmutual is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Massmutual Select T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select and Financial Industries 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 Financial Industries Fund 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 has no effect on the direction of Financial Industries i.e., Financial Industries and Massmutual Select go up and down completely randomly.
Pair Corralation between Financial Industries and Massmutual Select
Assuming the 90 days horizon Financial Industries Fund is expected to generate 3.11 times more return on investment than Massmutual Select. However, Financial Industries is 3.11 times more volatile than Massmutual Select T. It trades about 0.17 of its potential returns per unit of risk. Massmutual Select T is currently generating about 0.14 per unit of risk. If you would invest 1,829 in Financial Industries Fund on October 25, 2024 and sell it today you would earn a total of 65.00 from holding Financial Industries Fund or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Massmutual Select T
Performance |
| Timeline |
| Financial Industries |
| Massmutual Select |
Financial Industries and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Massmutual Select
The main advantage of trading using opposite Financial Industries and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries 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.| Financial Industries vs. Amg Managers Centersquare | Financial Industries vs. Tiaa Cref Real Estate | Financial Industries vs. Commonwealth Real Estate | Financial Industries vs. Vanguard Reit Index |
| Massmutual Select vs. Fidelity Focused High | Massmutual Select vs. Needham Aggressive Growth | Massmutual Select vs. Aqr Risk Parity | Massmutual Select vs. Pace High Yield |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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