Correlation Between Franklin Federal and Massmutual Retiresmart
Can any of the company-specific risk be diversified away by investing in both Franklin Federal and Massmutual Retiresmart 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 Franklin Federal and Massmutual Retiresmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Limited Term and Massmutual Retiresmart 2025, you can compare the effects of market volatilities on Franklin Federal and Massmutual Retiresmart 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 Franklin Federal with a short position of Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Massmutual Retiresmart.
Diversification Opportunities for Franklin Federal and Massmutual Retiresmart
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Massmutual is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Massmutual Retiresmart 2025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart and Franklin Federal 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 Franklin Federal Limited Term are associated (or correlated) with Massmutual Retiresmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Retiresmart has no effect on the direction of Franklin Federal i.e., Franklin Federal and Massmutual Retiresmart go up and down completely randomly.
Pair Corralation between Franklin Federal and Massmutual Retiresmart
Assuming the 90 days horizon Franklin Federal Limited Term is expected to generate 0.09 times more return on investment than Massmutual Retiresmart. However, Franklin Federal Limited Term is 11.05 times less risky than Massmutual Retiresmart. It trades about -0.26 of its potential returns per unit of risk. Massmutual Retiresmart 2025 is currently generating about -0.23 per unit of risk. If you would invest 1,032 in Franklin Federal Limited Term on September 25, 2024 and sell it today you would lose (6.00) from holding Franklin Federal Limited Term or give up 0.58% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Federal Limited Term vs. Massmutual Retiresmart 2025
Performance |
Timeline |
Franklin Federal Lim |
Massmutual Retiresmart |
Franklin Federal and Massmutual Retiresmart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Federal and Massmutual Retiresmart
The main advantage of trading using opposite Franklin Federal and Massmutual Retiresmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal position performs unexpectedly, Massmutual Retiresmart 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 Retiresmart will offset losses from the drop in Massmutual Retiresmart's long position.Franklin Federal vs. Fisher Large Cap | Franklin Federal vs. Old Westbury Large | Franklin Federal vs. Falcon Focus Scv | Franklin Federal vs. T Rowe Price |
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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.
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