Correlation Between Massmutual Premier and American Balanced
Can any of the company-specific risk be diversified away by investing in both Massmutual Premier and American Balanced 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 Massmutual Premier and American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Premier Balanced and American Balanced Fund, you can compare the effects of market volatilities on Massmutual Premier and American Balanced 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 Massmutual Premier with a short position of American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and American Balanced.
Diversification Opportunities for Massmutual Premier and American Balanced
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Massmutual and American is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Balanced and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced and Massmutual Premier 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 Massmutual Premier Balanced are associated (or correlated) with American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and American Balanced go up and down completely randomly.
Pair Corralation between Massmutual Premier and American Balanced
Assuming the 90 days horizon Massmutual Premier Balanced is expected to generate 0.93 times more return on investment than American Balanced. However, Massmutual Premier Balanced is 1.08 times less risky than American Balanced. It trades about 0.14 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.11 per unit of risk. If you would invest 1,118 in Massmutual Premier Balanced on September 4, 2024 and sell it today you would earn a total of 134.00 from holding Massmutual Premier Balanced or generate 11.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Premier Balanced vs. American Balanced Fund
Performance |
| Timeline |
| Massmutual Premier |
| American Balanced |
Massmutual Premier and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Premier and American Balanced
The main advantage of trading using opposite Massmutual Premier and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Premier position performs unexpectedly, American Balanced 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 American Balanced will offset losses from the drop in American Balanced's long position.| 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 |
| American Balanced vs. Multisector Bond Sma | American Balanced vs. Dreyfusstandish Global Fixed | American Balanced vs. Bbh Intermediate Municipal | American Balanced vs. Artisan High Income |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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