Correlation Between Massmutual Premier and American Beacon
Can any of the company-specific risk be diversified away by investing in both Massmutual Premier and American Beacon 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 Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Premier Diversified and American Beacon Bridgeway, you can compare the effects of market volatilities on Massmutual Premier and American Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and American Beacon.
Diversification Opportunities for Massmutual Premier and American Beacon
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Massmutual and American is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Diversified and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway 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 Diversified are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Bridgeway has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and American Beacon go up and down completely randomly.
Pair Corralation between Massmutual Premier and American Beacon
Assuming the 90 days horizon Massmutual Premier is expected to generate 4.04 times less return on investment than American Beacon. But when comparing it to its historical volatility, Massmutual Premier Diversified is 3.12 times less risky than American Beacon. It trades about 0.08 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,992 in American Beacon Bridgeway on September 4, 2024 and sell it today you would earn a total of 869.00 from holding American Beacon Bridgeway or generate 29.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Premier Diversified vs. American Beacon Bridgeway
Performance |
| Timeline |
| Massmutual Premier |
| American Beacon Bridgeway |
Massmutual Premier and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Premier and American Beacon
The main advantage of trading using opposite Massmutual Premier and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Premier position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Massmutual Premier vs. Eic Value Fund | Massmutual Premier vs. Commonwealth Global Fund | Massmutual Premier vs. Semiconductor Ultrasector Profund | Massmutual Premier vs. Issachar Fund Class |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour | American Beacon vs. American Beacon Twentyfour |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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