Correlation Between Massmutual Select and Adams Diversified

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

Diversification Opportunities for Massmutual Select and Adams Diversified

0.61

Correlation Coefficient

Massmutual Select  Adams Diversified

Poor diversification

The 3 months correlation between Massmutual and Adams is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Select T and Adams Diversified Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Diversified Equity 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 Adams Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Diversified Equity has no effect on the direction of Massmutual Select i.e., Massmutual Select and Adams Diversified go up and down completely randomly.

Pair Corralation between Massmutual Select and Adams Diversified

Assuming the 90 days horizon Massmutual Select is expected to generate 2.32 times less return on investment than Adams Diversified. But when comparing it to its historical volatility, Massmutual Select T is 1.72 times less risky than Adams Diversified. It trades about 0.09 of its potential returns per unit of risk. Adams Diversified Equity is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,197  in Adams Diversified Equity on September 20, 2024 and sell it today you would earn a total of  808.00  from holding Adams Diversified Equity or generate 67.5% return on investment over 90 days.

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

Massmutual Select T  vs.  Adams Diversified Equity

Massmutual Select

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Select T are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Massmutual Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Adams Diversified Equity

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adams Diversified Equity are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Adams Diversified 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 Adams Diversified

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

The idea behind Massmutual Select T and Adams Diversified Equity 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.