Correlation Between Massmutual Select and Redwood Systematic
Can any of the company-specific risk be diversified away by investing in both Massmutual Select and Redwood Systematic 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 Redwood Systematic 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 Redwood Systematic Macro, you can compare the effects of market volatilities on Massmutual Select and Redwood Systematic 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 Redwood Systematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Redwood Systematic.
Diversification Opportunities for Massmutual Select and Redwood Systematic
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Massmutual and Redwood is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select T and Redwood Systematic Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Systematic Macro 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 Redwood Systematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Systematic Macro has no effect on the direction of Massmutual Select i.e., Massmutual Select and Redwood Systematic go up and down completely randomly.
Pair Corralation between Massmutual Select and Redwood Systematic
Assuming the 90 days horizon Massmutual Select is expected to generate 1.35 times less return on investment than Redwood Systematic. But when comparing it to its historical volatility, Massmutual Select T is 1.1 times less risky than Redwood Systematic. It trades about 0.21 of its potential returns per unit of risk. Redwood Systematic Macro is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,884 in Redwood Systematic Macro on August 30, 2024 and sell it today you would earn a total of 94.00 from holding Redwood Systematic Macro or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Massmutual Select T vs. Redwood Systematic Macro
Performance |
| Timeline |
| Massmutual Select |
| Redwood Systematic Macro |
Massmutual Select and Redwood Systematic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Select and Redwood Systematic
The main advantage of trading using opposite Massmutual Select and Redwood Systematic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, Redwood Systematic 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 Redwood Systematic will offset losses from the drop in Redwood Systematic's long position.| Massmutual Select vs. Dreyfus Technology Growth | Massmutual Select vs. Science Technology Fund | Massmutual Select vs. Firsthand Technology Opportunities | Massmutual Select vs. Columbia Global Technology |
| Redwood Systematic vs. Western Asset Diversified | Redwood Systematic vs. Pioneer Diversified High | Redwood Systematic vs. Adams Diversified Equity | Redwood Systematic vs. Massmutual Premier Diversified |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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