Correlation Between Massmutual Retiresmart and Great West
Can any of the company-specific risk be diversified away by investing in both Massmutual Retiresmart and Great West 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 Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Massmutual Retiresmart 2030 and Great West Goldman Sachs, you can compare the effects of market volatilities on Massmutual Retiresmart and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Retiresmart and Great West.
Diversification Opportunities for Massmutual Retiresmart and Great West
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Massmutual and Great is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Retiresmart 2030 and Great West Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Goldman 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 2030 are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Goldman has no effect on the direction of Massmutual Retiresmart i.e., Massmutual Retiresmart and Great West go up and down completely randomly.
Pair Corralation between Massmutual Retiresmart and Great West
Assuming the 90 days horizon Massmutual Retiresmart is expected to generate 1.56 times less return on investment than Great West. But when comparing it to its historical volatility, Massmutual Retiresmart 2030 is 1.77 times less risky than Great West. It trades about 0.1 of its potential returns per unit of risk. Great West Goldman Sachs is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 797.00 in Great West Goldman Sachs on September 12, 2024 and sell it today you would earn a total of 214.00 from holding Great West Goldman Sachs or generate 26.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Massmutual Retiresmart 2030 vs. Great West Goldman Sachs
Performance |
| Timeline |
| Massmutual Retiresmart |
| Great West Goldman |
Massmutual Retiresmart and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Massmutual Retiresmart and Great West
The main advantage of trading using opposite Massmutual Retiresmart and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Retiresmart position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Massmutual Retiresmart vs. Great West Goldman Sachs | Massmutual Retiresmart vs. Gamco Global Gold | Massmutual Retiresmart vs. Sprott Gold Equity | Massmutual Retiresmart vs. James Balanced Golden |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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