Correlation Between Multisector Bond and Massmutual Premier

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

By analyzing existing cross correlation between Multisector Bond Sma and Massmutual Premier Balanced, you can compare the effects of market volatilities on Multisector Bond and Massmutual Premier 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 Multisector Bond with a short position of Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Massmutual Premier.

Diversification Opportunities for Multisector Bond and Massmutual Premier

0.2

Correlation Coefficient

Multisector Bond  Massmutual Premier

Modest diversification

The 3 months correlation between Multisector and Massmutual is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Massmutual Premier Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Massmutual Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Premier has no effect on the direction of Multisector Bond i.e., Multisector Bond and Massmutual Premier go up and down completely randomly.

Pair Corralation between Multisector Bond and Massmutual Premier

Assuming the 90 days horizon Multisector Bond Sma is expected to generate about the same return on investment as Massmutual Premier Balanced. But, Multisector Bond Sma is 1.25 times less risky than Massmutual Premier. It trades about 0.07 of its potential returns per unit of risk. Massmutual Premier Balanced is currently generating about 0.06 per unit of risk. If you would invest  994.00  in Massmutual Premier Balanced on October 23, 2024 and sell it today you would earn a total of  170.00  from holding Massmutual Premier Balanced or generate 17.1% return on investment over 90 days.

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

Multisector Bond Sma  vs.  Massmutual Premier Balanced

Multisector Bond Sma

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Multisector Bond Sma are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multisector Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Massmutual Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Premier Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Massmutual Premier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Multisector Bond and Massmutual Premier

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

The idea behind Multisector Bond Sma and Massmutual Premier Balanced 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.