Correlation Between Merck and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Merck and Massmutual Select 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 Merck and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Massmutual Select T, you can compare the effects of market volatilities on Merck and Massmutual Select 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 Merck with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Massmutual Select.
Diversification Opportunities for Merck and Massmutual Select
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Merck and Massmutual is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Massmutual Select T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select and Merck 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 Merck Company are associated (or correlated) with Massmutual Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Select has no effect on the direction of Merck i.e., Merck and Massmutual Select go up and down completely randomly.
Pair Corralation between Merck and Massmutual Select
Considering the 90-day investment horizon Merck Company is expected to under-perform the Massmutual Select. In addition to that, Merck is 1.43 times more volatile than Massmutual Select T. It trades about -0.02 of its total potential returns per unit of risk. Massmutual Select T is currently generating about 0.03 per unit of volatility. If you would invest 1,475 in Massmutual Select T on November 27, 2024 and sell it today you would earn a total of 196.00 from holding Massmutual Select T or generate 13.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Massmutual Select T
Performance |
| Timeline |
| Merck Company |
| Massmutual Select |
Merck and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Massmutual Select
The main advantage of trading using opposite Merck and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Massmutual Select 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 Massmutual Select will offset losses from the drop in Massmutual Select's long position.The idea behind Merck Company and Massmutual Select T 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.| Massmutual Select vs. Sprott Gold Equity | Massmutual Select vs. Deutsche Gold Precious | Massmutual Select vs. Gold And Precious | Massmutual Select vs. Oppenheimer Gold Special |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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