Correlation Between Locorr Spectrum and Massmutual Select

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

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

Diversification Opportunities for Locorr Spectrum and Massmutual Select

0.08

Correlation Coefficient

Locorr Spectrum  Massmutual Select

Significant diversification

The 3 months correlation between Locorr and MASSMUTUAL is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Spectrum Income 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 Locorr Spectrum 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 Locorr Spectrum Income 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 Locorr Spectrum i.e., Locorr Spectrum and Massmutual Select go up and down completely randomly.

Pair Corralation between Locorr Spectrum and Massmutual Select

Assuming the 90 days horizon Locorr Spectrum Income is expected to generate 0.66 times more return on investment than Massmutual Select. However, Locorr Spectrum Income is 1.51 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 -0.15 per unit of risk. If you would invest  556.00  in Locorr Spectrum Income on December 2, 2024 and sell it today you would earn a total of  8.00  from holding Locorr Spectrum Income or generate 1.44% return on investment over 90 days.

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

Locorr Spectrum Income  vs.  Massmutual Select Small

Locorr Spectrum Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Locorr Spectrum Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Locorr Spectrum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Massmutual Select Small

Risk-Adjusted Performance

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Locorr Spectrum and Massmutual Select

The main advantage of trading using opposite Locorr Spectrum and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Locorr Spectrum 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 Locorr Spectrum Income 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.