Correlation Between Massmutual Select and Virtus Westchester
Can any of the company-specific risk be diversified away by investing in both Massmutual Select and Virtus Westchester 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 Virtus Westchester 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 Virtus Westchester Credit, you can compare the effects of market volatilities on Massmutual Select and Virtus Westchester 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 Virtus Westchester. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Virtus Westchester.
Diversification Opportunities for Massmutual Select and Virtus Westchester
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Massmutual and Virtus is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Mid Cap and Virtus Westchester Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Westchester Credit 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 Virtus Westchester. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Westchester Credit has no effect on the direction of Massmutual Select i.e., Massmutual Select and Virtus Westchester go up and down completely randomly.
Pair Corralation between Massmutual Select and Virtus Westchester
Assuming the 90 days horizon Massmutual Select Mid Cap is expected to generate 7.57 times more return on investment than Virtus Westchester. However, Massmutual Select is 7.57 times more volatile than Virtus Westchester Credit. It trades about 0.06 of its potential returns per unit of risk. Virtus Westchester Credit is currently generating about 0.31 per unit of risk. If you would invest 1,064 in Massmutual Select Mid Cap on September 13, 2024 and sell it today you would earn a total of 251.00 from holding Massmutual Select Mid Cap or generate 23.59% 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. Virtus Westchester Credit
Performance |
| Timeline |
| Massmutual Select Mid |
| Virtus Westchester Credit |
Massmutual Select and Virtus Westchester Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Select and Virtus Westchester
The main advantage of trading using opposite Massmutual Select and Virtus Westchester positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, Virtus Westchester 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 Virtus Westchester will offset losses from the drop in Virtus Westchester's long position.The idea behind Massmutual Select Mid Cap and Virtus Westchester Credit 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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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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