Correlation Between Massmutual Select and CHURCH

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

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

Diversification Opportunities for Massmutual Select and CHURCH

-0.32

Correlation Coefficient

Massmutual Select  CHURCH

Very good diversification

The 3 months correlation between Massmutual and CHURCH is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Blue and CHURCH DWIGHT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHURCH DWIGHT INC and Massmutual Select 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 Massmutual Select Blue are associated (or correlated) with CHURCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHURCH DWIGHT INC has no effect on the direction of Massmutual Select i.e., Massmutual Select and CHURCH go up and down completely randomly.

Pair Corralation between Massmutual Select and CHURCH

Assuming the 90 days horizon Massmutual Select Blue is expected to under-perform the CHURCH. In addition to that, Massmutual Select is 1.76 times more volatile than CHURCH DWIGHT INC. It trades about -0.26 of its total potential returns per unit of risk. CHURCH DWIGHT INC is currently generating about -0.26 per unit of volatility. If you would invest  9,706  in CHURCH DWIGHT INC on October 12, 2024 and sell it today you would lose (352.00) from holding CHURCH DWIGHT INC or give up 3.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Massmutual Select Blue  vs.  CHURCH DWIGHT INC

Massmutual Select Blue

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Select Blue are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Massmutual Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CHURCH DWIGHT INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHURCH DWIGHT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CHURCH is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Massmutual Select and CHURCH

The main advantage of trading using opposite Massmutual Select and CHURCH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Massmutual Select position performs unexpectedly, CHURCH 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 CHURCH will offset losses from the drop in CHURCH's long position.

The idea behind Massmutual Select Blue and CHURCH DWIGHT INC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.