Correlation Between Massmutual Premier and Kensington Defender
Can any of the company-specific risk be diversified away by investing in both Massmutual Premier and Kensington Defender 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 Premier and Kensington Defender into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Premier Balanced and Kensington Defender Institutional, you can compare the effects of market volatilities on Massmutual Premier and Kensington Defender 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 Premier with a short position of Kensington Defender. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and Kensington Defender.
Diversification Opportunities for Massmutual Premier and Kensington Defender
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MASSMUTUAL and Kensington is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Balanced and Kensington Defender Institutio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Defender and Massmutual Premier 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 Premier Balanced are associated (or correlated) with Kensington Defender. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Defender has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and Kensington Defender go up and down completely randomly.
Pair Corralation between Massmutual Premier and Kensington Defender
Assuming the 90 days horizon Massmutual Premier Balanced is expected to generate 0.94 times more return on investment than Kensington Defender. However, Massmutual Premier Balanced is 1.06 times less risky than Kensington Defender. It trades about 0.03 of its potential returns per unit of risk. Kensington Defender Institutional is currently generating about 0.02 per unit of risk. If you would invest 1,134 in Massmutual Premier Balanced on November 28, 2024 and sell it today you would earn a total of 44.00 from holding Massmutual Premier Balanced or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Premier Balanced vs. Kensington Defender Institutio
Performance |
| Timeline |
| Massmutual Premier |
| Kensington Defender |
Massmutual Premier and Kensington Defender Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Premier and Kensington Defender
The main advantage of trading using opposite Massmutual Premier and Kensington Defender positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Premier position performs unexpectedly, Kensington Defender 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 Kensington Defender will offset losses from the drop in Kensington Defender's long position.| Massmutual Premier vs. Madison Diversified Income | Massmutual Premier vs. Jpmorgan Diversified Fund | Massmutual Premier vs. Elfun Diversified Fund | Massmutual Premier vs. Delaware Limited Term Diversified |
| Kensington Defender vs. Glg Intl Small | Kensington Defender vs. T Rowe Price | Kensington Defender vs. Federated Government Income | Kensington Defender vs. Gmo Quality Fund |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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