Correlation Between Red Oak and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Red Oak 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 Red Oak and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Oak Technology and Massmutual Select Mid Cap, you can compare the effects of market volatilities on Red Oak 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 Red Oak with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Massmutual Select.
Diversification Opportunities for Red Oak and Massmutual Select
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Massmutual is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Massmutual Select Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Mid and Red Oak 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 Red Oak Technology 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 Mid has no effect on the direction of Red Oak i.e., Red Oak and Massmutual Select go up and down completely randomly.
Pair Corralation between Red Oak and Massmutual Select
Assuming the 90 days horizon Red Oak Technology is expected to under-perform the Massmutual Select. In addition to that, Red Oak is 1.62 times more volatile than Massmutual Select Mid Cap. It trades about -0.01 of its total potential returns per unit of risk. Massmutual Select Mid Cap is currently generating about 0.32 per unit of volatility. If you would invest 1,287 in Massmutual Select Mid Cap on August 31, 2024 and sell it today you would earn a total of 74.00 from holding Massmutual Select Mid Cap or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Oak Technology vs. Massmutual Select Mid Cap
Performance |
| Timeline |
| Red Oak Technology |
| Massmutual Select Mid |
Red Oak and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Oak and Massmutual Select
The main advantage of trading using opposite Red Oak and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak 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.| Red Oak vs. Pin Oak Equity | Red Oak vs. White Oak Select | Red Oak vs. Black Oak Emerging | Red Oak vs. Berkshire Focus |
| Massmutual Select vs. Federated Global Allocation | Massmutual Select vs. Dreyfusstandish Global Fixed | Massmutual Select vs. Commonwealth Global Fund | Massmutual Select vs. Scharf Global Opportunity |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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