Correlation Between Prudential Core and Massmutual Premier

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

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

Diversification Opportunities for Prudential Core and Massmutual Premier

0.98

Correlation Coefficient

Prudential Core  Massmutual Premier

Almost no diversification

The 3 months correlation between Prudential and Massmutual is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Core Conservative and Massmutual Premier Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier and Prudential Core 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 Prudential Core Conservative are associated (or correlated) with Massmutual Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Premier has no effect on the direction of Prudential Core i.e., Prudential Core and Massmutual Premier go up and down completely randomly.

Pair Corralation between Prudential Core and Massmutual Premier

Assuming the 90 days horizon Prudential Core is expected to generate 1.3 times less return on investment than Massmutual Premier. In addition to that, Prudential Core is 1.03 times more volatile than Massmutual Premier Diversified. It trades about 0.05 of its total potential returns per unit of risk. Massmutual Premier Diversified is currently generating about 0.07 per unit of volatility. If you would invest  807.00  in Massmutual Premier Diversified on November 20, 2024 and sell it today you would earn a total of  10.00  from holding Massmutual Premier Diversified or generate 1.24% return on investment over 90 days.

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

Prudential Core Conservative  vs.  Massmutual Premier Diversified

Prudential Core Cons

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Core Conservative are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Massmutual Premier

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Premier Diversified are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Massmutual Premier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prudential Core and Massmutual Premier

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

The idea behind Prudential Core Conservative and Massmutual Premier Diversified 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.