Correlation Between Balanced Fund and Massmutual Premier

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

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

Diversification Opportunities for Balanced Fund and Massmutual Premier

0.98

Correlation Coefficient

Balanced Fund  Massmutual Premier

Almost no diversification

The 3 months correlation between Balanced and Massmutual is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Massmutual Premier Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier and Balanced Fund 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 Balanced Fund Retail 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 Balanced Fund i.e., Balanced Fund and Massmutual Premier go up and down completely randomly.

Pair Corralation between Balanced Fund and Massmutual Premier

Assuming the 90 days horizon Balanced Fund is expected to generate 1.56 times less return on investment than Massmutual Premier. In addition to that, Balanced Fund is 1.31 times more volatile than Massmutual Premier Balanced. It trades about 0.03 of its total potential returns per unit of risk. Massmutual Premier Balanced is currently generating about 0.06 per unit of volatility. If you would invest  1,035  in Massmutual Premier Balanced on October 23, 2024 and sell it today you would earn a total of  184.00  from holding Massmutual Premier Balanced or generate 17.78% return on investment over 90 days.

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

Balanced Fund Retail  vs.  Massmutual Premier Balanced

Balanced Fund Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balanced Fund Retail has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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

0 of 100

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 essential 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 Balanced Fund and Massmutual Premier

The main advantage of trading using opposite Balanced Fund and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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 Balanced Fund Retail 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.