Correlation Between Massmutual Select and Vanguard Lifestrategy
Can any of the company-specific risk be diversified away by investing in both Massmutual Select and Vanguard Lifestrategy 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 Vanguard Lifestrategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Select T and Vanguard Lifestrategy Moderate, you can compare the effects of market volatilities on Massmutual Select and Vanguard Lifestrategy 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 Vanguard Lifestrategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Vanguard Lifestrategy.
Diversification Opportunities for Massmutual Select and Vanguard Lifestrategy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Massmutual and Vanguard is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select T and Vanguard Lifestrategy Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Lifestrategy 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 T are associated (or correlated) with Vanguard Lifestrategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Lifestrategy has no effect on the direction of Massmutual Select i.e., Massmutual Select and Vanguard Lifestrategy go up and down completely randomly.
Pair Corralation between Massmutual Select and Vanguard Lifestrategy
Assuming the 90 days horizon Massmutual Select is expected to generate 1.54 times less return on investment than Vanguard Lifestrategy. But when comparing it to its historical volatility, Massmutual Select T is 1.28 times less risky than Vanguard Lifestrategy. It trades about 0.1 of its potential returns per unit of risk. Vanguard Lifestrategy Moderate is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,308 in Vanguard Lifestrategy Moderate on September 12, 2024 and sell it today you would earn a total of 96.00 from holding Vanguard Lifestrategy Moderate or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Massmutual Select T vs. Vanguard Lifestrategy Moderate
Performance |
| Timeline |
| Massmutual Select |
| Vanguard Lifestrategy |
Massmutual Select and Vanguard Lifestrategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Select and Vanguard Lifestrategy
The main advantage of trading using opposite Massmutual Select and Vanguard Lifestrategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, Vanguard Lifestrategy 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 Vanguard Lifestrategy will offset losses from the drop in Vanguard Lifestrategy's long position.| Massmutual Select vs. Massmutual Select Blue | Massmutual Select vs. Massmutual Select Blue | Massmutual Select vs. Massmutual Premier Short Duration | Massmutual Select vs. Massmutual Premier Short Duration |
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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