Correlation Between Massmutual Premier and Tax Exempt

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

By analyzing existing cross correlation between Massmutual Premier Diversified and Tax Exempt Long Term, you can compare the effects of market volatilities on Massmutual Premier and Tax Exempt 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 Tax Exempt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and Tax Exempt.

Diversification Opportunities for Massmutual Premier and Tax Exempt

0.73

Correlation Coefficient

Massmutual Premier  Tax Exempt

Poor diversification

The 3 months correlation between Massmutual and Tax is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Diversified and Tax Exempt Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Long 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 Diversified are associated (or correlated) with Tax Exempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Long has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and Tax Exempt go up and down completely randomly.

Pair Corralation between Massmutual Premier and Tax Exempt

Assuming the 90 days horizon Massmutual Premier Diversified is expected to generate 0.95 times more return on investment than Tax Exempt. However, Massmutual Premier Diversified is 1.06 times less risky than Tax Exempt. It trades about 0.07 of its potential returns per unit of risk. Tax Exempt Long Term is currently generating about -0.06 per unit of risk. If you would invest  821.00  in Massmutual Premier Diversified on December 4, 2024 and sell it today you would earn a total of  10.00  from holding Massmutual Premier Diversified or generate 1.22% return on investment over 90 days.

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

Massmutual Premier Diversified  vs.  Tax Exempt Long Term

Massmutual Premier

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Premier Diversified are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Massmutual Premier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tax Exempt Long

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Massmutual Premier and Tax Exempt

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

The idea behind Massmutual Premier Diversified and Tax Exempt Long Term 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.