Correlation Between Tax-managed and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Tax-managed 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 Tax-managed and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tax Managed Mid Small and Massmutual Select Small, you can compare the effects of market volatilities on Tax-managed 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 Tax-managed with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-managed and Massmutual Select.
Diversification Opportunities for Tax-managed and Massmutual Select
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Tax-managed and Massmutual is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Mid Small 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 Tax-managed 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 Tax Managed Mid Small 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 Tax-managed i.e., Tax-managed and Massmutual Select go up and down completely randomly.
Pair Corralation between Tax-managed and Massmutual Select
Assuming the 90 days horizon Tax Managed Mid Small is expected to generate 0.96 times more return on investment than Massmutual Select. However, Tax Managed Mid Small is 1.04 times less risky than Massmutual Select. It trades about -0.18 of its potential returns per unit of risk. Massmutual Select Small is currently generating about -0.18 per unit of risk. If you would invest 4,176 in Tax Managed Mid Small on January 13, 2025 and sell it today you would lose (724.00) from holding Tax Managed Mid Small or give up 17.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tax Managed Mid Small vs. Massmutual Select Small
Performance |
| Timeline |
| Tax Managed Mid |
| Massmutual Select Small |
Tax-managed and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tax-managed and Massmutual Select
The main advantage of trading using opposite Tax-managed and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax-managed 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.| Tax-managed vs. Inverse High Yield | Tax-managed vs. Alpine High Yield | Tax-managed vs. Gmo High Yield | Tax-managed vs. T Rowe Price |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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