Correlation Between Massmutual Premier and Transamerica Funds
Can any of the company-specific risk be diversified away by investing in both Massmutual Premier and Transamerica Funds 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 Transamerica Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Premier Funds and Transamerica Funds , you can compare the effects of market volatilities on Massmutual Premier and Transamerica Funds 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 Transamerica Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and Transamerica Funds.
Diversification Opportunities for Massmutual Premier and Transamerica Funds
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Massmutual and Transamerica is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Funds and Transamerica Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Funds 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 Funds are associated (or correlated) with Transamerica Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Funds has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and Transamerica Funds go up and down completely randomly.
Pair Corralation between Massmutual Premier and Transamerica Funds
Assuming the 90 days horizon Massmutual Premier is expected to generate 1.25 times less return on investment than Transamerica Funds. But when comparing it to its historical volatility, Massmutual Premier Funds is 1.49 times less risky than Transamerica Funds. It trades about 0.1 of its potential returns per unit of risk. Transamerica Funds is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Transamerica Funds on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Transamerica Funds or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Massmutual Premier Funds vs. Transamerica Funds
Performance |
| Timeline |
| Massmutual Premier Funds |
| Transamerica Funds |
Massmutual Premier and Transamerica Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Premier and Transamerica Funds
The main advantage of trading using opposite Massmutual Premier and Transamerica Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Premier position performs unexpectedly, Transamerica Funds 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 Transamerica Funds will offset losses from the drop in Transamerica Funds' long position.| Massmutual Premier vs. Vanguard Total Stock | Massmutual Premier vs. Vanguard 500 Index | Massmutual Premier vs. Vanguard Total Stock | Massmutual Premier vs. Vanguard Total Stock |
| Transamerica Funds vs. Vanguard Total Stock | Transamerica Funds vs. Vanguard 500 Index | Transamerica Funds vs. Vanguard Total Stock | Transamerica Funds vs. Vanguard Total Stock |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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