Correlation Between Massmutual Premier and Inverse Nasdaq

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

By analyzing existing cross correlation between Massmutual Premier Small and Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Massmutual Premier and Inverse Nasdaq 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 Premier with a short position of Inverse Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and Inverse Nasdaq.

Diversification Opportunities for Massmutual Premier and Inverse Nasdaq

0.3

Correlation Coefficient

Massmutual Premier  Inverse Nasdaq

Weak diversification

The 3 months correlation between Massmutual and Inverse is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Small and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 and Massmutual Premier 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 Premier Small are associated (or correlated) with Inverse Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq 100 has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and Inverse Nasdaq go up and down completely randomly.

Pair Corralation between Massmutual Premier and Inverse Nasdaq

Assuming the 90 days horizon Massmutual Premier Small is expected to generate 1.13 times more return on investment than Inverse Nasdaq. However, Massmutual Premier is 1.13 times more volatile than Inverse Nasdaq 100 Strategy. It trades about 0.01 of its potential returns per unit of risk. Inverse Nasdaq 100 Strategy is currently generating about -0.03 per unit of risk. If you would invest  1,614  in Massmutual Premier Small on October 4, 2024 and sell it today you would earn a total of  10.00  from holding Massmutual Premier Small or generate 0.62% return on investment over 90 days.

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

Massmutual Premier Small  vs.  Inverse Nasdaq 100 Strategy

Massmutual Premier Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Premier 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.

Inverse Nasdaq 100

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inverse Nasdaq 100 Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Massmutual Premier and Inverse Nasdaq

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

The idea behind Massmutual Premier Small and Inverse Nasdaq 100 Strategy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.