Correlation Between Nationwide Small and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Nationwide Small 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 Nationwide Small and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Small Cap and Massmutual Select Small, you can compare the effects of market volatilities on Nationwide Small 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 Nationwide Small with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Small and Massmutual Select.
Diversification Opportunities for Nationwide Small and Massmutual Select
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NATIONWIDE and MASSMUTUAL is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Small Cap and Massmutual Select Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Small and Nationwide Small 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 Nationwide Small Cap 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 Small has no effect on the direction of Nationwide Small i.e., Nationwide Small and Massmutual Select go up and down completely randomly.
Pair Corralation between Nationwide Small and Massmutual Select
Assuming the 90 days horizon Nationwide Small is expected to generate 1.07 times less return on investment than Massmutual Select. In addition to that, Nationwide Small is 1.1 times more volatile than Massmutual Select Small. It trades about 0.09 of its total potential returns per unit of risk. Massmutual Select Small is currently generating about 0.11 per unit of volatility. If you would invest 785.00 in Massmutual Select Small on August 26, 2024 and sell it today you would earn a total of 291.00 from holding Massmutual Select Small or generate 37.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Small Cap vs. Massmutual Select Small
Performance |
| Timeline |
| Nationwide Small Cap |
| Massmutual Select Small |
Nationwide Small and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Small and Massmutual Select
The main advantage of trading using opposite Nationwide Small and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Small 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 Nationwide Small Cap and Massmutual Select Small 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. Massmutual Select Mid | Massmutual Select vs. Massmutual Select Mid Cap | Massmutual Select vs. Massmutual Select Mid Cap | Massmutual Select 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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