Correlation Between Mm Sp and Massmutual Select

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

By analyzing existing cross correlation between Mm Sp 500 and Massmutual Select Small, you can compare the effects of market volatilities on Mm Sp 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 Mm Sp with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mm Sp and Massmutual Select.

Diversification Opportunities for Mm Sp and Massmutual Select

0.94

Correlation Coefficient

Mm Sp  Massmutual Select

Almost no diversification

The 3 months correlation between MMFFX and Massmutual is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mm Sp 500 and Massmutual Select Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Small and Mm Sp 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 Mm Sp 500 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 Small has no effect on the direction of Mm Sp i.e., Mm Sp and Massmutual Select go up and down completely randomly.

Pair Corralation between Mm Sp and Massmutual Select

Assuming the 90 days horizon Mm Sp is expected to generate 1.46 times less return on investment than Massmutual Select. But when comparing it to its historical volatility, Mm Sp 500 is 1.86 times less risky than Massmutual Select. It trades about 0.18 of its potential returns per unit of risk. Massmutual Select Small is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  849.00  in Massmutual Select Small on September 13, 2024 and sell it today you would earn a total of  91.00  from holding Massmutual Select Small or generate 10.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Mm Sp 500  vs.  Massmutual Select Small

Mm Sp 500

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mm Sp 500 are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mm Sp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Massmutual Select Small

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Select Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Massmutual Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mm Sp and Massmutual Select

The main advantage of trading using opposite Mm Sp and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mm Sp 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 Mm Sp 500 and Massmutual Select Small 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.