Correlation Between Franklin Moderate and Massmutual Retiresmart
Can any of the company-specific risk be diversified away by investing in both Franklin Moderate 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 Franklin Moderate and Massmutual Retiresmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Moderate Allocation and Massmutual Retiresmart 2045, you can compare the effects of market volatilities on Franklin Moderate 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 Franklin Moderate with a short position of Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Massmutual Retiresmart.
Diversification Opportunities for Franklin Moderate and Massmutual Retiresmart
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FRANKLIN and Massmutual is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Massmutual Retiresmart 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart and Franklin Moderate 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 Franklin Moderate Allocation 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 Franklin Moderate i.e., Franklin Moderate and Massmutual Retiresmart go up and down completely randomly.
Pair Corralation between Franklin Moderate and Massmutual Retiresmart
Assuming the 90 days horizon Franklin Moderate is expected to generate 1.15 times less return on investment than Massmutual Retiresmart. But when comparing it to its historical volatility, Franklin Moderate Allocation is 1.27 times less risky than Massmutual Retiresmart. It trades about 0.11 of its potential returns per unit of risk. Massmutual Retiresmart 2045 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,117 in Massmutual Retiresmart 2045 on August 30, 2024 and sell it today you would earn a total of 93.00 from holding Massmutual Retiresmart 2045 or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Franklin Moderate Allocation vs. Massmutual Retiresmart 2045
Performance |
| Timeline |
| Franklin Moderate |
| Massmutual Retiresmart |
Franklin Moderate and Massmutual Retiresmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Moderate and Massmutual Retiresmart
The main advantage of trading using opposite Franklin Moderate and Massmutual Retiresmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate 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.| Franklin Moderate vs. Franklin Mutual Beacon | Franklin Moderate vs. Franklin Mutual Global | Franklin Moderate vs. Franklin Mutual Global | Franklin Moderate vs. Franklin Mutual Global |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |