Correlation Between Rational Strategic and Massmutual Select

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

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

Diversification Opportunities for Rational Strategic and Massmutual Select

-0.61

Correlation Coefficient

Rational Strategic  Massmutual Select

Excellent diversification

The 3 months correlation between Rational and Massmutual is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Rational Strategic Allocation and Massmutual Select Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Total and Rational Strategic 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 Rational Strategic Allocation 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 Total has no effect on the direction of Rational Strategic i.e., Rational Strategic and Massmutual Select go up and down completely randomly.

Pair Corralation between Rational Strategic and Massmutual Select

Assuming the 90 days horizon Rational Strategic Allocation is expected to under-perform the Massmutual Select. In addition to that, Rational Strategic is 5.86 times more volatile than Massmutual Select Total. It trades about -0.11 of its total potential returns per unit of risk. Massmutual Select Total is currently generating about 0.16 per unit of volatility. If you would invest  823.00  in Massmutual Select Total on December 22, 2024 and sell it today you would earn a total of  26.00  from holding Massmutual Select Total or generate 3.16% return on investment over 90 days.

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

Rational Strategic Allocation  vs.  Massmutual Select Total

Rational Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rational Strategic Allocation 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Massmutual Select Total

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Select Total are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Massmutual Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rational Strategic and Massmutual Select

The main advantage of trading using opposite Rational Strategic and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Strategic 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 Rational Strategic Allocation and Massmutual Select Total 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.