Correlation Between Western Asset and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Massmutual Select T, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Massmutual Select.
Diversification Opportunities for Western Asset and Massmutual Select
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Massmutual is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Massmutual Select T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select and Western Asset 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 Western Asset Municipal 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 has no effect on the direction of Western Asset i.e., Western Asset and Massmutual Select go up and down completely randomly.
Pair Corralation between Western Asset and Massmutual Select
Assuming the 90 days horizon Western Asset is expected to generate 7.63 times less return on investment than Massmutual Select. But when comparing it to its historical volatility, Western Asset Municipal is 1.44 times less risky than Massmutual Select. It trades about 0.03 of its potential returns per unit of risk. Massmutual Select T is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,478 in Massmutual Select T on September 15, 2024 and sell it today you would earn a total of 16.00 from holding Massmutual Select T or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Massmutual Select T
Performance |
| Timeline |
| Western Asset Municipal |
| Massmutual Select |
Western Asset and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Massmutual Select
The main advantage of trading using opposite Western Asset and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Massmutual Select vs. Ab Value Fund | Massmutual Select vs. Rbc Microcap Value | Massmutual Select vs. Western Asset Municipal | Massmutual Select vs. Acm Dynamic 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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