Correlation Between Massmutual Premier and Adams Natural

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

By analyzing existing cross correlation between Massmutual Premier Disciplined and Adams Natural Resources, you can compare the effects of market volatilities on Massmutual Premier and Adams Natural 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 Premier with a short position of Adams Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and Adams Natural.

Diversification Opportunities for Massmutual Premier and Adams Natural

0.77

Correlation Coefficient

Massmutual Premier  Adams Natural

Poor diversification

The 3 months correlation between Massmutual and Adams is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Disciplined and Adams Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Natural Resources and Massmutual Premier 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 Premier Disciplined are associated (or correlated) with Adams Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Natural Resources has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and Adams Natural go up and down completely randomly.

Pair Corralation between Massmutual Premier and Adams Natural

Assuming the 90 days horizon Massmutual Premier Disciplined is expected to under-perform the Adams Natural. In addition to that, Massmutual Premier is 2.55 times more volatile than Adams Natural Resources. It trades about -0.07 of its total potential returns per unit of risk. Adams Natural Resources is currently generating about 0.02 per unit of volatility. If you would invest  2,286  in Adams Natural Resources on October 15, 2024 and sell it today you would earn a total of  23.00  from holding Adams Natural Resources or generate 1.01% return on investment over 90 days.

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

Massmutual Premier Disciplined  vs.  Adams Natural Resources

Massmutual Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Premier Disciplined has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Adams Natural Resources

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Adams Natural Resources are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Adams Natural is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Massmutual Premier and Adams Natural

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

The idea behind Massmutual Premier Disciplined and Adams Natural Resources 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.