Correlation Between GM and Massmutual Premier
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Massmutual Premier 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 Premier Disciplined, you can compare the effects of market volatilities on GM 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 GM with a short position of Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Massmutual Premier.
Diversification Opportunities for GM and Massmutual Premier
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Massmutual is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Massmutual Premier Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier 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 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 GM i.e., GM and Massmutual Premier go up and down completely randomly.
Pair Corralation between GM and Massmutual Premier
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.28 times more return on investment than Massmutual Premier. However, GM is 3.28 times more volatile than Massmutual Premier Disciplined. It trades about 0.08 of its potential returns per unit of risk. Massmutual Premier Disciplined is currently generating about 0.16 per unit of risk. If you would invest 4,551 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,008 from holding General Motors or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
General Motors vs. Massmutual Premier Disciplined
Performance |
| Timeline |
| General Motors |
| Massmutual Premier |
GM and Massmutual Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Massmutual Premier
The main advantage of trading using opposite GM and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and Massmutual Premier Disciplined 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 Premier vs. Massmutual Select Mid | Massmutual Premier vs. Massmutual Select Mid Cap | Massmutual Premier vs. Massmutual Select Mid Cap | Massmutual Premier vs. Massmutual Select Mid Cap |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |