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 Mid Cap and Small Cap Stock, 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
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Massmutual and Small is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Mid Cap and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 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 Stock 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 is expected to generate 1.12 times less return on investment than Small Cap. But when comparing it to its historical volatility, Massmutual Select Mid Cap is 1.88 times less risky than Small Cap. It trades about 0.14 of its potential returns per unit of risk. Small Cap Stock is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,338 in Small Cap Stock on September 3, 2024 and sell it today you would earn a total of 191.00 from holding Small Cap Stock or generate 14.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Select Mid Cap vs. Small Cap Stock
Performance |
| Timeline |
| Massmutual Select Mid |
| Small Cap Stock |
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. Nuveen Small Cap | Massmutual Select vs. Ultramid Cap Profund Ultramid Cap | Massmutual Select vs. Blackrock Mid Cap |
| Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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