Correlation Between Massmutual Select and Prudential Real

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

By analyzing existing cross correlation between Massmutual Select Mid Cap and Prudential Real Estate, you can compare the effects of market volatilities on Massmutual Select and Prudential Real 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 Prudential Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Select and Prudential Real.

Diversification Opportunities for Massmutual Select and Prudential Real

-0.17

Correlation Coefficient

Massmutual Select  Prudential Real

Good diversification

The 3 months correlation between Massmutual and Prudential is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select Mid Cap and Prudential Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Real Estate 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 Mid Cap are associated (or correlated) with Prudential Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Real Estate has no effect on the direction of Massmutual Select i.e., Massmutual Select and Prudential Real go up and down completely randomly.

Pair Corralation between Massmutual Select and Prudential Real

Assuming the 90 days horizon Massmutual Select Mid Cap is expected to generate 1.01 times more return on investment than Prudential Real. However, Massmutual Select is 1.01 times more volatile than Prudential Real Estate. It trades about 0.11 of its potential returns per unit of risk. Prudential Real Estate is currently generating about -0.06 per unit of risk. If you would invest  1,269  in Massmutual Select Mid Cap on September 13, 2024 and sell it today you would earn a total of  58.00  from holding Massmutual Select Mid Cap or generate 4.57% return on investment over 90 days.

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

Massmutual Select Mid Cap  vs.  Prudential Real Estate

Massmutual Select Mid

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Select Mid Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Massmutual Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Real 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 Prudential Real

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

The idea behind Massmutual Select Mid Cap and Prudential Real Estate 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.