Correlation Between Massmutual Select and Transamerica Small
Can any of the company-specific risk be diversified away by investing in both Massmutual Select and Transamerica Small 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 Transamerica Small 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 Transamerica Small Cap, you can compare the effects of market volatilities on Massmutual Select and Transamerica Small 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 Transamerica Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Transamerica Small.
Diversification Opportunities for Massmutual Select and Transamerica Small
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Massmutual and Transamerica is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select T and Transamerica Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Small Cap 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 Transamerica Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Small Cap has no effect on the direction of Massmutual Select i.e., Massmutual Select and Transamerica Small go up and down completely randomly.
Pair Corralation between Massmutual Select and Transamerica Small
Assuming the 90 days horizon Massmutual Select T is expected to generate 0.57 times more return on investment than Transamerica Small. However, Massmutual Select T is 1.74 times less risky than Transamerica Small. It trades about 0.13 of its potential returns per unit of risk. Transamerica Small Cap is currently generating about 0.07 per unit of risk. If you would invest 1,213 in Massmutual Select T on August 28, 2024 and sell it today you would earn a total of 480.00 from holding Massmutual Select T or generate 39.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Massmutual Select T vs. Transamerica Small Cap
Performance |
| Timeline |
| Massmutual Select |
| Transamerica Small Cap |
Massmutual Select and Transamerica Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Select and Transamerica Small
The main advantage of trading using opposite Massmutual Select and Transamerica Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, Transamerica Small 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 Transamerica Small will offset losses from the drop in Transamerica Small's long position.| Massmutual Select vs. Massmutual Select Mid | Massmutual Select vs. Massmutual Select Mid Cap | Massmutual Select vs. Massmutual Select Mid Cap | Massmutual Select 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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