Correlation Between Mid Cap and Massmutual Retiresmart
Can any of the company-specific risk be diversified away by investing in both Mid Cap 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 Mid Cap and Massmutual Retiresmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth and Massmutual Retiresmart 2030, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Massmutual Retiresmart.
Diversification Opportunities for Mid Cap and Massmutual Retiresmart
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mid and Massmutual is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Massmutual Retiresmart 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart and Mid Cap 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 Mid Cap Growth 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 Mid Cap i.e., Mid Cap and Massmutual Retiresmart go up and down completely randomly.
Pair Corralation between Mid Cap and Massmutual Retiresmart
Assuming the 90 days horizon Mid Cap Growth is expected to generate 2.38 times more return on investment than Massmutual Retiresmart. However, Mid Cap is 2.38 times more volatile than Massmutual Retiresmart 2030. It trades about 0.15 of its potential returns per unit of risk. Massmutual Retiresmart 2030 is currently generating about 0.11 per unit of risk. If you would invest 3,421 in Mid Cap Growth on September 3, 2024 and sell it today you would earn a total of 712.00 from holding Mid Cap Growth or generate 20.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Growth vs. Massmutual Retiresmart 2030
Performance |
| Timeline |
| Mid Cap Growth |
| Massmutual Retiresmart |
Mid Cap and Massmutual Retiresmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Massmutual Retiresmart
The main advantage of trading using opposite Mid Cap and Massmutual Retiresmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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.The idea behind Mid Cap Growth and Massmutual Retiresmart 2030 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 Retiresmart vs. Mid Cap Growth | Massmutual Retiresmart vs. Artisan Small Cap | Massmutual Retiresmart vs. Small Pany Growth | Massmutual Retiresmart vs. Pace Smallmedium Growth |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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