Correlation Between Boston Partners and Massmutual Select

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

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

Diversification Opportunities for Boston Partners and Massmutual Select

-0.01

Correlation Coefficient

Boston Partners  Massmutual Select

Good diversification

The 3 months correlation between Boston and Massmutual is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Small and Massmutual Select Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select and Boston Partners 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 Boston Partners Small 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 Boston Partners i.e., Boston Partners and Massmutual Select go up and down completely randomly.

Pair Corralation between Boston Partners and Massmutual Select

Assuming the 90 days horizon Boston Partners Small is expected to generate 0.41 times more return on investment than Massmutual Select. However, Boston Partners Small is 2.43 times less risky than Massmutual Select. It trades about 0.12 of its potential returns per unit of risk. Massmutual Select Diversified is currently generating about -0.1 per unit of risk. If you would invest  2,664  in Boston Partners Small on September 14, 2024 and sell it today you would earn a total of  236.00  from holding Boston Partners Small or generate 8.86% return on investment over 90 days.

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

Boston Partners Small  vs.  Massmutual Select Diversified

Boston Partners Small

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Partners Small are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Boston Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Boston Partners and Massmutual Select

The main advantage of trading using opposite Boston Partners and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Partners 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 Boston Partners Small 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.