Correlation Between Mutual Of and Massmutual Select

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

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

Diversification Opportunities for Mutual Of and Massmutual Select

0.79

Correlation Coefficient

Mutual Of  Massmutual Select

Poor diversification

The 3 months correlation between Mutual and Massmutual is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and Massmutual Select T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select and Mutual Of 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 Mutual Of America 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 Mutual Of i.e., Mutual Of and Massmutual Select go up and down completely randomly.

Pair Corralation between Mutual Of and Massmutual Select

Assuming the 90 days horizon Mutual Of America is expected to generate 0.93 times more return on investment than Massmutual Select. However, Mutual Of America is 1.08 times less risky than Massmutual Select. It trades about 0.02 of its potential returns per unit of risk. Massmutual Select T is currently generating about 0.01 per unit of risk. If you would invest  1,316  in Mutual Of America on October 7, 2024 and sell it today you would earn a total of  139.00  from holding Mutual Of America or generate 10.56% return on investment over 90 days.

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

Mutual Of America  vs.  Massmutual Select T

Mutual Of America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mutual Of America has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Mutual Of is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Massmutual Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Select T 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Mutual Of and Massmutual Select

The main advantage of trading using opposite Mutual Of and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of 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 Mutual Of America and Massmutual Select T 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.