Correlation Between Massmutual Retiresmart and Legg Mason

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

By analyzing existing cross correlation between Massmutual Retiresmart 2025 and Legg Mason Partners, you can compare the effects of market volatilities on Massmutual Retiresmart and Legg Mason 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 Retiresmart with a short position of Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Retiresmart and Legg Mason.

Diversification Opportunities for Massmutual Retiresmart and Legg Mason

0.56

Correlation Coefficient

Massmutual Retiresmart  Legg Mason

Very weak diversification

The 3 months correlation between Massmutual and Legg is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Retiresmart 2025 and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners and Massmutual Retiresmart 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 Retiresmart 2025 are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Partners has no effect on the direction of Massmutual Retiresmart i.e., Massmutual Retiresmart and Legg Mason go up and down completely randomly.

Pair Corralation between Massmutual Retiresmart and Legg Mason

Assuming the 90 days horizon Massmutual Retiresmart 2025 is expected to under-perform the Legg Mason. In addition to that, Massmutual Retiresmart is 1.29 times more volatile than Legg Mason Partners. It trades about -0.26 of its total potential returns per unit of risk. Legg Mason Partners is currently generating about -0.26 per unit of volatility. If you would invest  1,459  in Legg Mason Partners on October 6, 2024 and sell it today you would lose (67.00) from holding Legg Mason Partners or give up 4.59% of portfolio value over 90 days.

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

Massmutual Retiresmart 2025  vs.  Legg Mason Partners

Massmutual Retiresmart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Retiresmart 2025 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Massmutual Retiresmart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Legg Mason Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Legg Mason Partners has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Legg Mason 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 Retiresmart and Legg Mason

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

The idea behind Massmutual Retiresmart 2025 and Legg Mason Partners 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.