Correlation Between Massmutual Retiresmart and Cref Inflation
Can any of the company-specific risk be diversified away by investing in both Massmutual Retiresmart and Cref Inflation 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 Retiresmart and Cref Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Retiresmart Servative and Cref Inflation Linked Bond, you can compare the effects of market volatilities on Massmutual Retiresmart and Cref Inflation 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 Retiresmart with a short position of Cref Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Retiresmart and Cref Inflation.
Diversification Opportunities for Massmutual Retiresmart and Cref Inflation
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Massmutual and Cref is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Retiresmart Servati and Cref Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Inflation Linked and Massmutual Retiresmart 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 Retiresmart Servative are associated (or correlated) with Cref Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Inflation Linked has no effect on the direction of Massmutual Retiresmart i.e., Massmutual Retiresmart and Cref Inflation go up and down completely randomly.
Pair Corralation between Massmutual Retiresmart and Cref Inflation
Assuming the 90 days horizon Massmutual Retiresmart Servative is expected to generate 1.69 times more return on investment than Cref Inflation. However, Massmutual Retiresmart is 1.69 times more volatile than Cref Inflation Linked Bond. It trades about 0.28 of its potential returns per unit of risk. Cref Inflation Linked Bond is currently generating about 0.29 per unit of risk. If you would invest 933.00 in Massmutual Retiresmart Servative on September 13, 2024 and sell it today you would earn a total of 13.00 from holding Massmutual Retiresmart Servative or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Massmutual Retiresmart Servati vs. Cref Inflation Linked Bond
Performance |
| Timeline |
| Massmutual Retiresmart |
| Cref Inflation Linked |
Massmutual Retiresmart and Cref Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Retiresmart and Cref Inflation
The main advantage of trading using opposite Massmutual Retiresmart and Cref Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Retiresmart position performs unexpectedly, Cref Inflation 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 Cref Inflation will offset losses from the drop in Cref Inflation's long position.The idea behind Massmutual Retiresmart Servative and Cref Inflation Linked Bond 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.
| Cref Inflation vs. Vanguard Total Stock | Cref Inflation vs. Vanguard 500 Index | Cref Inflation vs. Vanguard Total Stock | Cref Inflation vs. Vanguard Total Stock |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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