Correlation Between Massmutual Select and Small Cap
Can any of the company-specific risk be diversified away by investing in both Massmutual Select and Small Cap 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 Select and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Select Diversified and Small Cap Growth, you can compare the effects of market volatilities on Massmutual Select and Small Cap 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 Select with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Small Cap.
Diversification Opportunities for Massmutual Select and Small Cap
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Massmutual and Small is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Diversified and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Massmutual Select 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 Select Diversified are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Massmutual Select i.e., Massmutual Select and Small Cap go up and down completely randomly.
Pair Corralation between Massmutual Select and Small Cap
Assuming the 90 days horizon Massmutual Select Diversified is expected to under-perform the Small Cap. In addition to that, Massmutual Select is 1.55 times more volatile than Small Cap Growth. It trades about -0.05 of its total potential returns per unit of risk. Small Cap Growth is currently generating about 0.05 per unit of volatility. If you would invest 2,085 in Small Cap Growth on November 28, 2024 and sell it today you would earn a total of 207.00 from holding Small Cap Growth or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.46% |
| Values | Daily Returns |
Massmutual Select Diversified vs. Small Cap Growth
Performance |
| Timeline |
| Massmutual Select |
| Small Cap Growth |
Massmutual Select and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Select and Small Cap
The main advantage of trading using opposite Massmutual Select and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Massmutual Select vs. Morgan Stanley Institutional | Massmutual Select vs. Templeton Growth Fund | Massmutual Select vs. Tfa Alphagen Growth | Massmutual Select vs. Rational Defensive Growth |
| Small Cap vs. Aig Government Money | Small Cap vs. Jpmorgan Trust I | Small Cap vs. Schwab Government Money | Small Cap vs. Doubleline Emerging Markets |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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