Correlation Between Great-west Real and Massmutual Select

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

By analyzing existing cross correlation between Great West Real Estate and Massmutual Select Mid, you can compare the effects of market volatilities on Great-west Real and Massmutual Select 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 Great-west Real with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Real and Massmutual Select.

Diversification Opportunities for Great-west Real and Massmutual Select

0.8

Correlation Coefficient

Great-west Real  Massmutual Select

Very poor diversification

The 3 months correlation between Great-west and Massmutual is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Great West Real Estate and Massmutual Select Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Mid and Great-west Real 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 Great West Real Estate are associated (or correlated) with Massmutual Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Select Mid has no effect on the direction of Great-west Real i.e., Great-west Real and Massmutual Select go up and down completely randomly.

Pair Corralation between Great-west Real and Massmutual Select

Assuming the 90 days horizon Great West Real Estate is expected to generate 1.06 times more return on investment than Massmutual Select. However, Great-west Real is 1.06 times more volatile than Massmutual Select Mid. It trades about 0.01 of its potential returns per unit of risk. Massmutual Select Mid is currently generating about 0.01 per unit of risk. If you would invest  786.00  in Great West Real Estate on October 4, 2024 and sell it today you would earn a total of  40.00  from holding Great West Real Estate or generate 5.09% return on investment over 90 days.

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

Great West Real Estate  vs.  Massmutual Select Mid

Great West Real

Risk-Adjusted Performance

0 of 100

Very Weak

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

Massmutual Select Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Select Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Great-west Real and Massmutual Select

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

The idea behind Great West Real Estate and Massmutual Select Mid 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.