Correlation Between Massmutual Select and Vanguard Sumer

Can any of the company-specific risk be diversified away by investing in both Massmutual Select and Vanguard Sumer 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 Vanguard Sumer 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 Vanguard Sumer Staples, you can compare the effects of market volatilities on Massmutual Select and Vanguard Sumer 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 Vanguard Sumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Vanguard Sumer.

Diversification Opportunities for Massmutual Select and Vanguard Sumer

0.3

Correlation Coefficient

Massmutual Select  Vanguard Sumer

Weak diversification

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

Pair Corralation between Massmutual Select and Vanguard Sumer

Assuming the 90 days horizon Massmutual Select Diversified is expected to under-perform the Vanguard Sumer. In addition to that, Massmutual Select is 4.95 times more volatile than Vanguard Sumer Staples. It trades about -0.07 of its total potential returns per unit of risk. Vanguard Sumer Staples is currently generating about 0.07 per unit of volatility. If you would invest  10,729  in Vanguard Sumer Staples on September 5, 2024 and sell it today you would earn a total of  249.00  from holding Vanguard Sumer Staples or generate 2.32% return on investment over 90 days.

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

Massmutual Select Diversified  vs.  Vanguard Sumer Staples

Massmutual Select

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Vanguard Sumer Staples

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Sumer Staples are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Sumer 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 Select and Vanguard Sumer

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

The idea behind Massmutual Select Diversified and Vanguard Sumer Staples 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 Global Correlations module to find global opportunities by holding instruments from different markets.