Correlation Between GM and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Massmutual Select Blue, you can compare the effects of market volatilities on GM 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 GM with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Massmutual Select.
Diversification Opportunities for GM and Massmutual Select
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Massmutual is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Massmutual Select Blue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Blue and GM 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 General Motors 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 Blue has no effect on the direction of GM i.e., GM and Massmutual Select go up and down completely randomly.
Pair Corralation between GM and Massmutual Select
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.17 times more return on investment than Massmutual Select. However, GM is 1.17 times more volatile than Massmutual Select Blue. It trades about 0.11 of its potential returns per unit of risk. Massmutual Select Blue is currently generating about 0.02 per unit of risk. If you would invest 3,070 in General Motors on August 29, 2024 and sell it today you would earn a total of 2,480 from holding General Motors or generate 80.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Massmutual Select Blue
Performance |
| Timeline |
| General Motors |
| Massmutual Select Blue |
GM and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Massmutual Select
The main advantage of trading using opposite GM and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and Massmutual Select Blue pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Massmutual Select vs. Great West Loomis Sayles | Massmutual Select vs. Fpa Queens Road | Massmutual Select vs. Ultramid Cap Profund Ultramid Cap | Massmutual Select vs. Boston Partners Small |
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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