Correlation Between Massmutual Premier and Government Street
Can any of the company-specific risk be diversified away by investing in both Massmutual Premier and Government Street 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 Government Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Premier Inflation Protected and Government Street Equity, you can compare the effects of market volatilities on Massmutual Premier and Government Street 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 Government Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and Government Street.
Diversification Opportunities for Massmutual Premier and Government Street
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Massmutual and Government is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Inflation P and Government Street Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Street Equity 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 Inflation Protected are associated (or correlated) with Government Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Street Equity has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and Government Street go up and down completely randomly.
Pair Corralation between Massmutual Premier and Government Street
Assuming the 90 days horizon Massmutual Premier is expected to generate 6.6 times less return on investment than Government Street. But when comparing it to its historical volatility, Massmutual Premier Inflation Protected is 2.39 times less risky than Government Street. It trades about 0.03 of its potential returns per unit of risk. Government Street Equity is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,158 in Government Street Equity on October 25, 2024 and sell it today you would earn a total of 4,107 from holding Government Street Equity or generate 44.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Massmutual Premier Inflation P vs. Government Street Equity
Performance |
| Timeline |
| Massmutual Premier |
| Government Street Equity |
Massmutual Premier and Government Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Premier and Government Street
The main advantage of trading using opposite Massmutual Premier and Government Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Premier position performs unexpectedly, Government Street 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 Government Street will offset losses from the drop in Government Street's long position.The idea behind Massmutual Premier Inflation Protected and Government Street Equity 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.
| Government Street vs. Angel Oak Ultrashort | Government Street vs. Oakhurst Short Duration | Government Street vs. Siit Ultra Short | Government Street vs. Cmg Ultra Short |
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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