Correlation Between The Gold and Massmutual Select

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

By analyzing existing cross correlation between The Gold Bullion and Massmutual Select Small, you can compare the effects of market volatilities on The Gold 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 The Gold with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gold and Massmutual Select.

Diversification Opportunities for The Gold and Massmutual Select

-0.53

Correlation Coefficient

The Gold  Massmutual Select

Excellent diversification

The 3 months correlation between The and Massmutual is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Massmutual Select Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Small and The Gold 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 The Gold Bullion 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 Small has no effect on the direction of The Gold i.e., The Gold and Massmutual Select go up and down completely randomly.

Pair Corralation between The Gold and Massmutual Select

Assuming the 90 days horizon The Gold Bullion is expected to generate 0.82 times more return on investment than Massmutual Select. However, The Gold Bullion is 1.22 times less risky than Massmutual Select. It trades about 0.27 of its potential returns per unit of risk. Massmutual Select Small is currently generating about -0.1 per unit of risk. If you would invest  1,978  in The Gold Bullion on December 21, 2024 and sell it today you would earn a total of  294.00  from holding The Gold Bullion or generate 14.86% return on investment over 90 days.

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

The Gold Bullion  vs.  Massmutual Select Small

Gold Bullion

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bullion are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, The Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Massmutual Select Small

Risk-Adjusted Performance

Very Weak

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

Pair Trading with The Gold and Massmutual Select

The main advantage of trading using opposite The Gold and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Gold 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 The Gold Bullion and Massmutual Select Small 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.