Correlation Between Smallcap Fund and Massmutual Retiresmart
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund and Massmutual Retiresmart 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 Smallcap Fund and Massmutual Retiresmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Fund Fka and Massmutual Retiresmart 2045, you can compare the effects of market volatilities on Smallcap Fund and Massmutual Retiresmart 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 Smallcap Fund with a short position of Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Massmutual Retiresmart.
Diversification Opportunities for Smallcap Fund and Massmutual Retiresmart
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smallcap and Massmutual is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Massmutual Retiresmart 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with Massmutual Retiresmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Retiresmart has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Massmutual Retiresmart go up and down completely randomly.
Pair Corralation between Smallcap Fund and Massmutual Retiresmart
Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 1.48 times more return on investment than Massmutual Retiresmart. However, Smallcap Fund is 1.48 times more volatile than Massmutual Retiresmart 2045. It trades about 0.35 of its potential returns per unit of risk. Massmutual Retiresmart 2045 is currently generating about -0.03 per unit of risk. If you would invest 2,549 in Smallcap Fund Fka on October 24, 2024 and sell it today you would earn a total of 161.00 from holding Smallcap Fund Fka or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Fund Fka vs. Massmutual Retiresmart 2045
Performance |
| Timeline |
| Smallcap Fund Fka |
| Massmutual Retiresmart |
Smallcap Fund and Massmutual Retiresmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Fund and Massmutual Retiresmart
The main advantage of trading using opposite Smallcap Fund and Massmutual Retiresmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund position performs unexpectedly, Massmutual Retiresmart 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 Retiresmart will offset losses from the drop in Massmutual Retiresmart's long position.| Smallcap Fund vs. Greenspring Fund Retail | Smallcap Fund vs. Aqr Long Short Equity | Smallcap Fund vs. T Rowe Price | Smallcap Fund vs. Gmo Global Equity |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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