Correlation Between Massmutual Retiresmart and Massmutual Premier
Can any of the company-specific risk be diversified away by investing in both Massmutual Retiresmart and Massmutual Premier 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 Massmutual Premier 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 Massmutual Premier Balanced, you can compare the effects of market volatilities on Massmutual Retiresmart and Massmutual Premier 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 Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Retiresmart and Massmutual Premier.
Diversification Opportunities for Massmutual Retiresmart and Massmutual Premier
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Massmutual and Massmutual is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Retiresmart 2050 and Massmutual Premier Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier 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 Massmutual Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Premier has no effect on the direction of Massmutual Retiresmart i.e., Massmutual Retiresmart and Massmutual Premier go up and down completely randomly.
Pair Corralation between Massmutual Retiresmart and Massmutual Premier
Assuming the 90 days horizon Massmutual Retiresmart is expected to generate 1.12 times less return on investment than Massmutual Premier. In addition to that, Massmutual Retiresmart is 1.33 times more volatile than Massmutual Premier Balanced. It trades about 0.1 of its total potential returns per unit of risk. Massmutual Premier Balanced is currently generating about 0.15 per unit of volatility. If you would invest 1,200 in Massmutual Premier Balanced on September 5, 2024 and sell it today you would earn a total of 120.00 from holding Massmutual Premier Balanced or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Retiresmart 2050 vs. Massmutual Premier Balanced
Performance |
| Timeline |
| Massmutual Retiresmart |
| Massmutual Premier |
Massmutual Retiresmart and Massmutual Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Retiresmart and Massmutual Premier
The main advantage of trading using opposite Massmutual Retiresmart and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Retiresmart position performs unexpectedly, Massmutual Premier 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 Massmutual Premier will offset losses from the drop in Massmutual Premier's long position.The idea behind Massmutual Retiresmart 2050 and Massmutual Premier Balanced 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.
| Massmutual Premier vs. Massmutual Select Mid | Massmutual Premier vs. Massmutual Select Mid Cap | Massmutual Premier vs. Massmutual Select Mid Cap | Massmutual Premier 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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