Correlation Between Massmutual Retiresmart and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Massmutual Retiresmart and Massmutual Select 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 Select 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 Select Mid Cap, you can compare the effects of market volatilities on Massmutual Retiresmart and Massmutual Select 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 Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Retiresmart and Massmutual Select.
Diversification Opportunities for Massmutual Retiresmart and Massmutual Select
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Massmutual and Massmutual is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Retiresmart 2050 and Massmutual Select Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Mid 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 Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Select Mid has no effect on the direction of Massmutual Retiresmart i.e., Massmutual Retiresmart and Massmutual Select go up and down completely randomly.
Pair Corralation between Massmutual Retiresmart and Massmutual Select
Assuming the 90 days horizon Massmutual Retiresmart is expected to generate 1.2 times less return on investment than Massmutual Select. But when comparing it to its historical volatility, Massmutual Retiresmart 2050 is 1.08 times less risky than Massmutual Select. It trades about 0.1 of its potential returns per unit of risk. Massmutual Select Mid Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,171 in Massmutual Select Mid Cap on September 1, 2024 and sell it today you would earn a total of 175.00 from holding Massmutual Select Mid Cap or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Retiresmart 2050 vs. Massmutual Select Mid Cap
Performance |
| Timeline |
| Massmutual Retiresmart |
| Massmutual Select Mid |
Massmutual Retiresmart and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Retiresmart and Massmutual Select
The main advantage of trading using opposite Massmutual Retiresmart and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Retiresmart position performs unexpectedly, Massmutual Select 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 Select will offset losses from the drop in Massmutual Select's long position.The idea behind Massmutual Retiresmart 2050 and Massmutual Select Mid Cap 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 Select vs. Huber Capital Diversified | Massmutual Select vs. Calvert Conservative Allocation | Massmutual Select vs. Jhancock Diversified Macro | Massmutual Select vs. Evaluator Conservative Rms |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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