Correlation Between Investec Emerging and Massmutual Select

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Can any of the company-specific risk be diversified away by investing in both Investec Emerging 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 Investec Emerging and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Emerging Markets and Massmutual Select Diversified, you can compare the effects of market volatilities on Investec Emerging 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 Investec Emerging with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Massmutual Select.

Diversification Opportunities for Investec Emerging and Massmutual Select

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Investec and Massmutual is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Massmutual Select Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select and Investec Emerging 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 Investec Emerging Markets 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 Investec Emerging i.e., Investec Emerging and Massmutual Select go up and down completely randomly.

Pair Corralation between Investec Emerging and Massmutual Select

Assuming the 90 days horizon Investec Emerging Markets is expected to generate 2.37 times more return on investment than Massmutual Select. However, Investec Emerging is 2.37 times more volatile than Massmutual Select Diversified. It trades about -0.02 of its potential returns per unit of risk. Massmutual Select Diversified is currently generating about -0.09 per unit of risk. If you would invest  1,080  in Investec Emerging Markets on September 13, 2024 and sell it today you would lose (8.00) from holding Investec Emerging Markets or give up 0.74% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Investec Emerging Markets  vs.  Massmutual Select Diversified

 Performance 
       Timeline  
Investec Emerging Markets 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Investec Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Investec Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Massmutual Select 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Massmutual Select Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Investec Emerging and Massmutual Select Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Investec Emerging and Massmutual Select

The main advantage of trading using opposite Investec Emerging and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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.
The idea behind Investec Emerging Markets and Massmutual Select Diversified 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.
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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