Correlation Between Metropolitan West and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Metropolitan West 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 Metropolitan West and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West Total and Massmutual Select Total, you can compare the effects of market volatilities on Metropolitan West 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 Metropolitan West with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Massmutual Select.
Diversification Opportunities for Metropolitan West and Massmutual Select
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Metropolitan and Massmutual is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Total and Massmutual Select Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Total and Metropolitan West 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 Metropolitan West Total 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 Total has no effect on the direction of Metropolitan West i.e., Metropolitan West and Massmutual Select go up and down completely randomly.
Pair Corralation between Metropolitan West and Massmutual Select
Assuming the 90 days horizon Metropolitan West is expected to generate 1.01 times less return on investment than Massmutual Select. In addition to that, Metropolitan West is 1.06 times more volatile than Massmutual Select Total. It trades about 0.11 of its total potential returns per unit of risk. Massmutual Select Total is currently generating about 0.12 per unit of volatility. If you would invest 835.00 in Massmutual Select Total on September 4, 2024 and sell it today you would earn a total of 8.00 from holding Massmutual Select Total or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West Total vs. Massmutual Select Total
Performance |
| Timeline |
| Metropolitan West Total |
| Massmutual Select Total |
Metropolitan West and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Massmutual Select
The main advantage of trading using opposite Metropolitan West and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West 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.| Metropolitan West vs. Metropolitan West Alpha | Metropolitan West vs. Metropolitan West Unconstrained | Metropolitan West vs. Metropolitan West Porate | Metropolitan West vs. Metropolitan West Unconstrained |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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