Correlation Between Short Duration and Massmutual Premier

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

By analyzing existing cross correlation between Short Duration Inflation and Massmutual Premier Disciplined, you can compare the effects of market volatilities on Short Duration and Massmutual Premier 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 Short Duration with a short position of Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Massmutual Premier.

Diversification Opportunities for Short Duration and Massmutual Premier

0.79

Correlation Coefficient

Short Duration  Massmutual Premier

Poor diversification

The 3 months correlation between Short and Massmutual is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and Massmutual Premier Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier and Short Duration 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 Short Duration Inflation are associated (or correlated) with Massmutual Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Premier has no effect on the direction of Short Duration i.e., Short Duration and Massmutual Premier go up and down completely randomly.

Pair Corralation between Short Duration and Massmutual Premier

Assuming the 90 days horizon Short Duration is expected to generate 1.49 times less return on investment than Massmutual Premier. But when comparing it to its historical volatility, Short Duration Inflation is 5.46 times less risky than Massmutual Premier. It trades about 0.03 of its potential returns per unit of risk. Massmutual Premier Disciplined is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,270  in Massmutual Premier Disciplined on October 9, 2024 and sell it today you would earn a total of  12.00  from holding Massmutual Premier Disciplined or generate 0.94% return on investment over 90 days.

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

Short Duration Inflation  vs.  Massmutual Premier Disciplined

Short Duration Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Short Duration Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Short Duration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Massmutual Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Premier Disciplined 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Short Duration and Massmutual Premier

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

The idea behind Short Duration Inflation and Massmutual Premier Disciplined 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.