Correlation Between Massmutual Premier and Kentucky Tax-free

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

By analyzing existing cross correlation between Massmutual Premier Inflation Protected and Kentucky Tax Free Short To Medium, you can compare the effects of market volatilities on Massmutual Premier and Kentucky Tax-free 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 Kentucky Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Massmutual Premier and Kentucky Tax-free.

Diversification Opportunities for Massmutual Premier and Kentucky Tax-free

0.84

Correlation Coefficient

Massmutual Premier  Kentucky Tax-free

Very poor diversification

The 3 months correlation between Massmutual and Kentucky is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Massmutual Premier Inflation P and Kentucky Tax Free Short To Med in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free 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 Inflation Protected are associated (or correlated) with Kentucky Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of Massmutual Premier i.e., Massmutual Premier and Kentucky Tax-free go up and down completely randomly.

Pair Corralation between Massmutual Premier and Kentucky Tax-free

Assuming the 90 days horizon Massmutual Premier Inflation Protected is expected to under-perform the Kentucky Tax-free. In addition to that, Massmutual Premier is 3.07 times more volatile than Kentucky Tax Free Short To Medium. It trades about -0.19 of its total potential returns per unit of risk. Kentucky Tax Free Short To Medium is currently generating about -0.06 per unit of volatility. If you would invest  513.00  in Kentucky Tax Free Short To Medium on October 9, 2024 and sell it today you would lose (1.00) from holding Kentucky Tax Free Short To Medium or give up 0.19% of portfolio value over 90 days.

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

Massmutual Premier Inflation P  vs.  Kentucky Tax Free Short To Med

Massmutual Premier

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kentucky Tax Free

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kentucky Tax Free Short To Medium has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Kentucky Tax-free 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 Premier and Kentucky Tax-free

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

The idea behind Massmutual Premier Inflation Protected and Kentucky Tax Free Short To Medium 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.