Correlation Between Kensington Managed and Massmutual Premier
Can any of the company-specific risk be diversified away by investing in both Kensington Managed 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 Kensington Managed and Massmutual Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kensington Managed Income and Massmutual Premier Diversified, you can compare the effects of market volatilities on Kensington Managed 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 Kensington Managed with a short position of Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Managed and Massmutual Premier.
Diversification Opportunities for Kensington Managed and Massmutual Premier
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kensington and Massmutual is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Managed Income and Massmutual Premier Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier and Kensington Managed 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 Kensington Managed Income 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 Kensington Managed i.e., Kensington Managed and Massmutual Premier go up and down completely randomly.
Pair Corralation between Kensington Managed and Massmutual Premier
Assuming the 90 days horizon Kensington Managed is expected to generate 7.01 times less return on investment than Massmutual Premier. But when comparing it to its historical volatility, Kensington Managed Income is 2.14 times less risky than Massmutual Premier. It trades about 0.1 of its potential returns per unit of risk. Massmutual Premier Diversified is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 809.00 in Massmutual Premier Diversified on November 28, 2024 and sell it today you would earn a total of 17.00 from holding Massmutual Premier Diversified or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kensington Managed Income vs. Massmutual Premier Diversified
Performance |
| Timeline |
| Kensington Managed Income |
| Massmutual Premier |
Kensington Managed and Massmutual Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kensington Managed and Massmutual Premier
The main advantage of trading using opposite Kensington Managed and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kensington Managed 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 Kensington Managed Income and Massmutual Premier Diversified 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.
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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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