Correlation Between Touchstone Small and Massmutual Retiresmart
Can any of the company-specific risk be diversified away by investing in both Touchstone Small 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 Touchstone Small and Massmutual Retiresmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Small Cap and Massmutual Retiresmart 2035, you can compare the effects of market volatilities on Touchstone Small 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 Touchstone Small with a short position of Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Massmutual Retiresmart.
Diversification Opportunities for Touchstone Small and Massmutual Retiresmart
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and Massmutual is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Massmutual Retiresmart 2035 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart and Touchstone Small 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 Touchstone Small Cap 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 Touchstone Small i.e., Touchstone Small and Massmutual Retiresmart go up and down completely randomly.
Pair Corralation between Touchstone Small and Massmutual Retiresmart
Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.93 times more return on investment than Massmutual Retiresmart. However, Touchstone Small is 1.93 times more volatile than Massmutual Retiresmart 2035. It trades about 0.07 of its potential returns per unit of risk. Massmutual Retiresmart 2035 is currently generating about 0.11 per unit of risk. If you would invest 3,238 in Touchstone Small Cap on September 12, 2024 and sell it today you would earn a total of 828.00 from holding Touchstone Small Cap or generate 25.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Massmutual Retiresmart 2035
Performance |
| Timeline |
| Touchstone Small Cap |
| Massmutual Retiresmart |
Touchstone Small and Massmutual Retiresmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Massmutual Retiresmart
The main advantage of trading using opposite Touchstone Small and Massmutual Retiresmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small 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.| Touchstone Small vs. Smallcap Growth Fund | Touchstone Small vs. Mutual Of America | Touchstone Small vs. Aqr Small Cap | Touchstone Small vs. Scout Small Cap |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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