Correlation Between Massmutual Select and California Bond
Can any of the company-specific risk be diversified away by investing in both Massmutual Select and California Bond 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 California Bond 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 California Bond Fund, you can compare the effects of market volatilities on Massmutual Select and California Bond 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 California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and California Bond.
Diversification Opportunities for Massmutual Select and California Bond
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Massmutual and California is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Mid Cap and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond 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 California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Massmutual Select i.e., Massmutual Select and California Bond go up and down completely randomly.
Pair Corralation between Massmutual Select and California Bond
Assuming the 90 days horizon Massmutual Select Mid Cap is expected to under-perform the California Bond. In addition to that, Massmutual Select is 9.76 times more volatile than California Bond Fund. It trades about -0.29 of its total potential returns per unit of risk. California Bond Fund is currently generating about -0.34 per unit of volatility. If you would invest 1,053 in California Bond Fund on October 9, 2024 and sell it today you would lose (19.00) from holding California Bond Fund or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Select Mid Cap vs. California Bond Fund
Performance |
| Timeline |
| Massmutual Select Mid |
| California Bond |
Massmutual Select and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Select and California Bond
The main advantage of trading using opposite Massmutual Select and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Massmutual Select vs. Massmutual Select Total | Massmutual Select vs. Massmutual Select Total | Massmutual Select vs. Massmutual Select Total | Massmutual Select vs. Massmutual Select Total |
| California Bond vs. Blrc Sgy Mnp | California Bond vs. Artisan High Income | California Bond vs. Versatile Bond Portfolio | California Bond vs. Siit 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 Stocks Directory module to find actively traded stocks across global markets.
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