Correlation Between Nasdaq and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Massmutual Select Small, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Massmutual Select.
Diversification Opportunities for Nasdaq and Massmutual Select
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and Massmutual is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Massmutual Select Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Small and Nasdaq 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 Nasdaq Inc 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 Small has no effect on the direction of Nasdaq i.e., Nasdaq and Massmutual Select go up and down completely randomly.
Pair Corralation between Nasdaq and Massmutual Select
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.09 times more return on investment than Massmutual Select. However, Nasdaq is 1.09 times more volatile than Massmutual Select Small. It trades about 0.05 of its potential returns per unit of risk. Massmutual Select Small is currently generating about 0.04 per unit of risk. If you would invest 5,915 in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of 2,121 from holding Nasdaq Inc or generate 35.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. Massmutual Select Small
Performance |
| Timeline |
| Nasdaq Inc |
| Massmutual Select Small |
Nasdaq and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Massmutual Select
The main advantage of trading using opposite Nasdaq and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc and Massmutual Select Small 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. Massmutual Select Mid | Massmutual Select vs. Massmutual Select Mid Cap | Massmutual Select vs. Massmutual Select Mid Cap | Massmutual Select vs. Massmutual Select Mid Cap |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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