Correlation Between Champlain Mid and Massmutual Premier

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

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

Diversification Opportunities for Champlain Mid and Massmutual Premier

0.71

Correlation Coefficient

Champlain Mid  Massmutual Premier

Poor diversification

The 3 months correlation between Champlain and Massmutual is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and Massmutual Premier Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier and Champlain Mid 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 Champlain Mid Cap 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 Champlain Mid i.e., Champlain Mid and Massmutual Premier go up and down completely randomly.

Pair Corralation between Champlain Mid and Massmutual Premier

Assuming the 90 days horizon Champlain Mid Cap is expected to under-perform the Massmutual Premier. In addition to that, Champlain Mid is 1.68 times more volatile than Massmutual Premier Balanced. It trades about -0.1 of its total potential returns per unit of risk. Massmutual Premier Balanced is currently generating about -0.04 per unit of volatility. If you would invest  1,151  in Massmutual Premier Balanced on December 24, 2024 and sell it today you would lose (17.00) from holding Massmutual Premier Balanced or give up 1.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Champlain Mid Cap  vs.  Massmutual Premier Balanced

Champlain Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champlain Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Massmutual Premier

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Champlain Mid and Massmutual Premier

The main advantage of trading using opposite Champlain Mid and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Mid 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 Champlain Mid Cap and Massmutual Premier Balanced 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.