Correlation Between Massmutual Select and Massmutual Premier

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Can any of the company-specific risk be diversified away by investing in both Massmutual Select and Massmutual Premier 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 Massmutual Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Select Mid Cap and Massmutual Premier Small, you can compare the effects of market volatilities on Massmutual Select and Massmutual Premier 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 Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Massmutual Premier.

Diversification Opportunities for Massmutual Select and Massmutual Premier

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Massmutual and Massmutual is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Mid Cap and Massmutual Premier Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier Small 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 Mid Cap are associated (or correlated) with Massmutual Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Premier Small has no effect on the direction of Massmutual Select i.e., Massmutual Select and Massmutual Premier go up and down completely randomly.

Pair Corralation between Massmutual Select and Massmutual Premier

Assuming the 90 days horizon Massmutual Select is expected to generate 1.09 times less return on investment than Massmutual Premier. But when comparing it to its historical volatility, Massmutual Select Mid Cap is 1.56 times less risky than Massmutual Premier. It trades about 0.06 of its potential returns per unit of risk. Massmutual Premier Small is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,507  in Massmutual Premier Small on September 13, 2024 and sell it today you would earn a total of  352.00  from holding Massmutual Premier Small or generate 23.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy99.8%
ValuesDaily Returns

Massmutual Select Mid Cap  vs.  Massmutual Premier Small

 Performance 
       Timeline  
Massmutual Select Mid 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Select Mid Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Massmutual Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Massmutual Premier Small 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Premier Small are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Massmutual Premier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Massmutual Select and Massmutual Premier Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Massmutual Select and Massmutual Premier

The main advantage of trading using opposite Massmutual Select and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, Massmutual Premier 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 Massmutual Premier will offset losses from the drop in Massmutual Premier's long position.
The idea behind Massmutual Select Mid Cap and Massmutual Premier Small pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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