Correlation Between Pace High and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Pace High 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 Pace High and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace High Yield and Massmutual Select T, you can compare the effects of market volatilities on Pace High 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 Pace High with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Massmutual Select.
Diversification Opportunities for Pace High and Massmutual Select
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pace and Massmutual is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Massmutual Select T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select and Pace High 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 Pace High Yield 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 Pace High i.e., Pace High and Massmutual Select go up and down completely randomly.
Pair Corralation between Pace High and Massmutual Select
Assuming the 90 days horizon Pace High is expected to generate 5.04 times less return on investment than Massmutual Select. But when comparing it to its historical volatility, Pace High Yield is 1.73 times less risky than Massmutual Select. It trades about 0.08 of its potential returns per unit of risk. Massmutual Select T is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,349 in Massmutual Select T on November 4, 2024 and sell it today you would earn a total of 23.00 from holding Massmutual Select T or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Massmutual Select T
Performance |
| Timeline |
| Pace High Yield |
| Massmutual Select |
Pace High and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Massmutual Select
The main advantage of trading using opposite Pace High and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High 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 Pace High Yield 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. Dws Global Macro | Massmutual Select vs. Transamerica Asset Allocation | Massmutual Select vs. Barings Global Floating | Massmutual Select vs. T Rowe Price |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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