Correlation Between Massmutual Premier and Aquila Tax-free
Can any of the company-specific risk be diversified away by investing in both Massmutual Premier and Aquila Tax-free 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 Aquila Tax-free 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 Aquila Tax Free Fund, you can compare the effects of market volatilities on Massmutual Premier and Aquila Tax-free 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 Aquila Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and Aquila Tax-free.
Diversification Opportunities for Massmutual Premier and Aquila Tax-free
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Massmutual and Aquila is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Diversified and Aquila Tax Free Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquila Tax Free 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 Aquila Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquila Tax Free has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and Aquila Tax-free go up and down completely randomly.
Pair Corralation between Massmutual Premier and Aquila Tax-free
Assuming the 90 days horizon Massmutual Premier Diversified is expected to generate 1.38 times more return on investment than Aquila Tax-free. However, Massmutual Premier is 1.38 times more volatile than Aquila Tax Free Fund. It trades about 0.13 of its potential returns per unit of risk. Aquila Tax Free Fund is currently generating about 0.17 per unit of risk. If you would invest 813.00 in Massmutual Premier Diversified on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Massmutual Premier Diversified or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Premier Diversified vs. Aquila Tax Free Fund
Performance |
| Timeline |
| Massmutual Premier |
| Aquila Tax Free |
Massmutual Premier and Aquila Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Premier and Aquila Tax-free
The main advantage of trading using opposite Massmutual Premier and Aquila Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Premier position performs unexpectedly, Aquila Tax-free 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 Aquila Tax-free will offset losses from the drop in Aquila Tax-free's long position.| Massmutual Premier vs. Pimco Income Fund | Massmutual Premier vs. HUMANA INC | Massmutual Premier vs. Aquagold International | Massmutual Premier vs. Barloworld Ltd ADR |
| Aquila Tax-free vs. American Century Diversified | Aquila Tax-free vs. Sentinel Small Pany | Aquila Tax-free vs. Tax Managed Mid Small | Aquila Tax-free vs. Massmutual Premier Diversified |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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