Correlation Between Massmutual Select and Plumb Equity
Can any of the company-specific risk be diversified away by investing in both Massmutual Select and Plumb Equity 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 Plumb Equity 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 Plumb Equity, you can compare the effects of market volatilities on Massmutual Select and Plumb Equity 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 Plumb Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Plumb Equity.
Diversification Opportunities for Massmutual Select and Plumb Equity
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Massmutual and Plumb is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Diversified and Plumb Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Equity 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 Plumb Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Equity has no effect on the direction of Massmutual Select i.e., Massmutual Select and Plumb Equity go up and down completely randomly.
Pair Corralation between Massmutual Select and Plumb Equity
Assuming the 90 days horizon Massmutual Select Diversified is expected to under-perform the Plumb Equity. In addition to that, Massmutual Select is 3.26 times more volatile than Plumb Equity. It trades about -0.08 of its total potential returns per unit of risk. Plumb Equity is currently generating about 0.13 per unit of volatility. If you would invest 2,999 in Plumb Equity on September 12, 2024 and sell it today you would earn a total of 213.00 from holding Plumb Equity or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Massmutual Select Diversified vs. Plumb Equity
Performance |
| Timeline |
| Massmutual Select |
| Plumb Equity |
Massmutual Select and Plumb Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Select and Plumb Equity
The main advantage of trading using opposite Massmutual Select and Plumb Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, Plumb Equity 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 Plumb Equity will offset losses from the drop in Plumb Equity's long position.| Massmutual Select vs. Origin Emerging Markets | Massmutual Select vs. Ashmore Emerging Markets | Massmutual Select vs. Investec Emerging Markets | Massmutual Select vs. Dws Emerging Markets |
| Plumb Equity vs. Blackrock High Yield | Plumb Equity vs. Neuberger Berman Income | Plumb Equity vs. Guggenheim High Yield | Plumb Equity vs. Pace High Yield |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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