Correlation Between Materials Portfolio and Massmutual Select

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

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

Diversification Opportunities for Materials Portfolio and Massmutual Select

-0.04

Correlation Coefficient

Materials Portfolio  Massmutual Select

Good diversification

The 3 months correlation between Materials and Massmutual is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Materials Portfolio Fidelity and Massmutual Select Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Total and Materials Portfolio 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 Materials Portfolio Fidelity 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 Total has no effect on the direction of Materials Portfolio i.e., Materials Portfolio and Massmutual Select go up and down completely randomly.

Pair Corralation between Materials Portfolio and Massmutual Select

Assuming the 90 days horizon Materials Portfolio is expected to generate 2.31 times less return on investment than Massmutual Select. In addition to that, Materials Portfolio is 2.9 times more volatile than Massmutual Select Total. It trades about 0.02 of its total potential returns per unit of risk. Massmutual Select Total is currently generating about 0.14 per unit of volatility. If you would invest  813.00  in Massmutual Select Total on December 30, 2024 and sell it today you would earn a total of  25.00  from holding Massmutual Select Total or generate 3.08% return on investment over 90 days.

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

Materials Portfolio Fidelity  vs.  Massmutual Select Total

Materials Portfolio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Materials Portfolio Fidelity are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Materials Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Massmutual Select Total

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Select Total are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Materials Portfolio and Massmutual Select

The main advantage of trading using opposite Materials Portfolio and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Portfolio 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 Materials Portfolio Fidelity and Massmutual Select Total 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.