Correlation Between Champlain Small and Massmutual Select

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

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

Diversification Opportunities for Champlain Small and Massmutual Select

0.8

Correlation Coefficient

Champlain Small  Massmutual Select

Very poor diversification

The 3 months correlation between Champlain and Massmutual is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small 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 Champlain Small 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 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 Small has no effect on the direction of Champlain Small i.e., Champlain Small and Massmutual Select go up and down completely randomly.

Pair Corralation between Champlain Small and Massmutual Select

Assuming the 90 days horizon Champlain Small is expected to generate 1.08 times less return on investment than Massmutual Select. But when comparing it to its historical volatility, Champlain Small is 1.08 times less risky than Massmutual Select. It trades about 0.04 of its potential returns per unit of risk. Massmutual Select Small is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  787.00  in Massmutual Select Small on September 19, 2024 and sell it today you would earn a total of  176.00  from holding Massmutual Select Small or generate 22.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Champlain Small  vs.  Massmutual Select Small

Champlain Small

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Small are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Champlain Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Massmutual Select Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Select Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Massmutual Select 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 Small and Massmutual Select

The main advantage of trading using opposite Champlain Small and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small 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 Champlain Small 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.