Correlation Between Aberdeen Japan and Massmutual Select

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

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

Diversification Opportunities for Aberdeen Japan and Massmutual Select

0.05

Correlation Coefficient

Aberdeen Japan  Massmutual Select

Significant diversification

The 3 months correlation between Aberdeen and MASSMUTUAL is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Japan Equity and Massmutual Select Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select and Aberdeen Japan 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 Aberdeen Japan Equity 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 has no effect on the direction of Aberdeen Japan i.e., Aberdeen Japan and Massmutual Select go up and down completely randomly.

Pair Corralation between Aberdeen Japan and Massmutual Select

Considering the 90-day investment horizon Aberdeen Japan Equity is expected to generate 0.37 times more return on investment than Massmutual Select. However, Aberdeen Japan Equity is 2.68 times less risky than Massmutual Select. It trades about -0.03 of its potential returns per unit of risk. Massmutual Select Diversified is currently generating about -0.07 per unit of risk. If you would invest  597.00  in Aberdeen Japan Equity on September 3, 2024 and sell it today you would lose (14.00) from holding Aberdeen Japan Equity or give up 2.35% of portfolio value over 90 days.

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

Aberdeen Japan Equity  vs.  Massmutual Select Diversified

Aberdeen Japan Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Japan Equity has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable technical and fundamental indicators, Aberdeen Japan is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Massmutual Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Select Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Aberdeen Japan and Massmutual Select

The main advantage of trading using opposite Aberdeen Japan and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Japan 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 Aberdeen Japan Equity and Massmutual Select Diversified 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.