Correlation Between Massmutual Select and Mmnwx
Can any of the company-specific risk be diversified away by investing in both Massmutual Select and Mmnwx 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 Mmnwx 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 Mmnwx, you can compare the effects of market volatilities on Massmutual Select and Mmnwx 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 Mmnwx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Mmnwx.
Diversification Opportunities for Massmutual Select and Mmnwx
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Massmutual and Mmnwx is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Mid Cap and Mmnwx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mmnwx 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 Mmnwx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mmnwx has no effect on the direction of Massmutual Select i.e., Massmutual Select and Mmnwx go up and down completely randomly.
Pair Corralation between Massmutual Select and Mmnwx
Assuming the 90 days horizon Massmutual Select Mid Cap is expected to generate 2.14 times more return on investment than Mmnwx. However, Massmutual Select is 2.14 times more volatile than Mmnwx. It trades about 0.11 of its potential returns per unit of risk. Mmnwx is currently generating about 0.08 per unit of risk. If you would invest 1,200 in Massmutual Select Mid Cap on September 1, 2024 and sell it today you would earn a total of 186.00 from holding Massmutual Select Mid Cap or generate 15.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Select Mid Cap vs. Mmnwx
Performance |
| Timeline |
| Massmutual Select Mid |
| Mmnwx |
Massmutual Select and Mmnwx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Select and Mmnwx
The main advantage of trading using opposite Massmutual Select and Mmnwx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, Mmnwx 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 Mmnwx will offset losses from the drop in Mmnwx's long position.| Massmutual Select vs. Massmutual Select Mid | Massmutual Select vs. Massmutual Select Mid Cap | Massmutual Select vs. Massmutual Select Mid Cap | Massmutual Select vs. Massmutual Select Mid Cap |
| Mmnwx vs. Massmutual Select Mid | Mmnwx vs. Massmutual Select Mid Cap | Mmnwx vs. Massmutual Select Mid Cap | Mmnwx vs. Massmutual Select Mid Cap |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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