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 Small, 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
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and Massmutual is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield 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 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 Small 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 12.05 times less return on investment than Massmutual Select. But when comparing it to its historical volatility, Pace High Yield is 13.1 times less risky than Massmutual Select. It trades about 0.26 of its potential returns per unit of risk. Massmutual Select Small is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,005 in Massmutual Select Small on August 29, 2024 and sell it today you would earn a total of 82.00 from holding Massmutual Select Small or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Massmutual Select Small
Performance |
| Timeline |
| Pace High Yield |
| Massmutual Select Small |
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.| Pace High vs. Prudential High Yield | Pace High vs. HUMANA INC | Pace High vs. Aquagold International | Pace High vs. Barloworld Ltd ADR |
| Massmutual Select vs. Needham Aggressive Growth | Massmutual Select vs. Vanguard High Yield Tax Exempt | Massmutual Select vs. Pace High Yield | Massmutual Select vs. California High Yield Municipal |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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