Correlation Between Massmutual Retiresmart and Small Cap
Can any of the company-specific risk be diversified away by investing in both Massmutual Retiresmart 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 Retiresmart 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 Retiresmart 2050 and Small Cap Equity, you can compare the effects of market volatilities on Massmutual Retiresmart 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 Retiresmart with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Retiresmart and Small Cap.
Diversification Opportunities for Massmutual Retiresmart and Small Cap
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Massmutual and Small is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Retiresmart 2050 and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity and Massmutual Retiresmart 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 Retiresmart 2050 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 Equity has no effect on the direction of Massmutual Retiresmart i.e., Massmutual Retiresmart and Small Cap go up and down completely randomly.
Pair Corralation between Massmutual Retiresmart and Small Cap
Assuming the 90 days horizon Massmutual Retiresmart is expected to generate 1.35 times less return on investment than Small Cap. But when comparing it to its historical volatility, Massmutual Retiresmart 2050 is 1.73 times less risky than Small Cap. It trades about 0.09 of its potential returns per unit of risk. Small Cap Equity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,725 in Small Cap Equity on August 25, 2024 and sell it today you would earn a total of 257.00 from holding Small Cap Equity or generate 14.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Massmutual Retiresmart 2050 vs. Small Cap Equity
Performance |
| Timeline |
| Massmutual Retiresmart |
| Small Cap Equity |
Massmutual Retiresmart and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Retiresmart and Small Cap
The main advantage of trading using opposite Massmutual Retiresmart and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Retiresmart 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 Retiresmart vs. Small Cap Equity | Massmutual Retiresmart vs. The Hartford Equity | Massmutual Retiresmart vs. Scharf Fund Retail | Massmutual Retiresmart vs. The Hartford Equity |
| Small Cap vs. Growth Allocation Fund | Small Cap vs. Defensive Market Strategies | Small Cap vs. Defensive Market Strategies | Small Cap vs. Value Equity Institutional |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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