Correlation Between Massmutual Select and Putnam Global

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

By analyzing existing cross correlation between Massmutual Select Diversified and Putnam Global Industrials, you can compare the effects of market volatilities on Massmutual Select and Putnam Global 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 Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Putnam Global.

Diversification Opportunities for Massmutual Select and Putnam Global

0.85

Correlation Coefficient

Massmutual Select  Putnam Global

Very poor diversification

The 3 months correlation between Massmutual and Putnam is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Diversified and Putnam Global Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Industrials 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 Diversified are associated (or correlated) with Putnam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Global Industrials has no effect on the direction of Massmutual Select i.e., Massmutual Select and Putnam Global go up and down completely randomly.

Pair Corralation between Massmutual Select and Putnam Global

Assuming the 90 days horizon Massmutual Select is expected to generate 10.07 times less return on investment than Putnam Global. In addition to that, Massmutual Select is 1.38 times more volatile than Putnam Global Industrials. It trades about 0.01 of its total potential returns per unit of risk. Putnam Global Industrials is currently generating about 0.09 per unit of volatility. If you would invest  2,281  in Putnam Global Industrials on December 2, 2024 and sell it today you would earn a total of  1,062  from holding Putnam Global Industrials or generate 46.56% return on investment over 90 days.

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

Massmutual Select Diversified  vs.  Putnam Global Industrials

Massmutual Select

Risk-Adjusted Performance

Very Weak

Over the last 90 days Massmutual Select Diversified 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.

Putnam Global Industrials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Global Industrials 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.

Pair Trading with Massmutual Select and Putnam Global

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

The idea behind Massmutual Select Diversified and Putnam Global Industrials 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.