Correlation Between Us Government and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Massmutual Select Blue, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Massmutual Select.
Diversification Opportunities for Us Government and Massmutual Select
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between USGFX and Massmutual is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Massmutual Select Blue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Blue and Us Government 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 Us Government Securities 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 Blue has no effect on the direction of Us Government i.e., Us Government and Massmutual Select go up and down completely randomly.
Pair Corralation between Us Government and Massmutual Select
Assuming the 90 days horizon Us Government is expected to generate 4.62 times less return on investment than Massmutual Select. But when comparing it to its historical volatility, Us Government Securities is 3.95 times less risky than Massmutual Select. It trades about 0.02 of its potential returns per unit of risk. Massmutual Select Blue is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,805 in Massmutual Select Blue on August 26, 2024 and sell it today you would earn a total of 141.00 from holding Massmutual Select Blue or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. Massmutual Select Blue
Performance |
| Timeline |
| Us Government Securities |
| Massmutual Select Blue |
Us Government and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Massmutual Select
The main advantage of trading using opposite Us Government and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. Bond Fund Of | Us Government vs. Capital World Bond | Us Government vs. American Mutual Fund | Us Government vs. Smallcap World Fund |
| Massmutual Select vs. Franklin Adjustable Government | Massmutual Select vs. Inverse Government Long | Massmutual Select vs. Short Term Government Fund | Massmutual Select vs. Us Government Securities |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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