Correlation Between Massmutual Select and Df Dent

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

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

Diversification Opportunities for Massmutual Select and Df Dent

0.41

Correlation Coefficient

Massmutual Select  Df Dent

Very weak diversification

The 3 months correlation between Massmutual and DFDSX is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select T and Df Dent Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Df Dent Small 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 T are associated (or correlated) with Df Dent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Df Dent Small has no effect on the direction of Massmutual Select i.e., Massmutual Select and Df Dent go up and down completely randomly.

Pair Corralation between Massmutual Select and Df Dent

Assuming the 90 days horizon Massmutual Select is expected to generate 2.3 times less return on investment than Df Dent. But when comparing it to its historical volatility, Massmutual Select T is 2.12 times less risky than Df Dent. It trades about 0.05 of its potential returns per unit of risk. Df Dent Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,864  in Df Dent Small on September 28, 2024 and sell it today you would earn a total of  619.00  from holding Df Dent Small or generate 33.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Massmutual Select T  vs.  Df Dent Small

Massmutual Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Select T has generated negative risk-adjusted returns adding no value to fund investors. 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.

Df Dent Small

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Df Dent Small are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Df Dent 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 Df Dent

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

The idea behind Massmutual Select T and Df Dent Small 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.