Correlation Between Massmutual Select and Northern Quality

Can any of the company-specific risk be diversified away by investing in both Massmutual Select and Northern Quality 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 Massmutual Select and Northern Quality into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Massmutual Select Diversified and Northern Quality Esg, you can compare the effects of market volatilities on Massmutual Select and Northern Quality 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 Massmutual Select with a short position of Northern Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Northern Quality.

Diversification Opportunities for Massmutual Select and Northern Quality

-0.34

Correlation Coefficient

Massmutual Select  Northern Quality

Very good diversification

The 3 months correlation between Massmutual and Northern is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Diversified and Northern Quality Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Quality Esg and Massmutual Select 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 Massmutual Select Diversified are associated (or correlated) with Northern Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Quality Esg has no effect on the direction of Massmutual Select i.e., Massmutual Select and Northern Quality go up and down completely randomly.

Pair Corralation between Massmutual Select and Northern Quality

Assuming the 90 days horizon Massmutual Select Diversified is expected to under-perform the Northern Quality. In addition to that, Massmutual Select is 4.37 times more volatile than Northern Quality Esg. It trades about -0.08 of its total potential returns per unit of risk. Northern Quality Esg is currently generating about 0.22 per unit of volatility. If you would invest  2,025  in Northern Quality Esg on September 12, 2024 and sell it today you would earn a total of  185.00  from holding Northern Quality Esg or generate 9.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Massmutual Select Diversified  vs.  Northern Quality Esg

Massmutual Select

Risk-Adjusted Performance

0 of 100

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.

Northern Quality Esg

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Quality Esg are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Northern Quality may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Massmutual Select and Northern Quality

The main advantage of trading using opposite Massmutual Select and Northern Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, Northern Quality 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 Northern Quality will offset losses from the drop in Northern Quality's long position.

The idea behind Massmutual Select Diversified and Northern Quality Esg 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.