Correlation Between Swan Defined and Massmutual Premier

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

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

Diversification Opportunities for Swan Defined and Massmutual Premier

0.38

Correlation Coefficient

Swan Defined  Massmutual Premier

Weak diversification

The 3 months correlation between Swan and Massmutual is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Swan Defined Risk and Massmutual Premier Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier and Swan Defined 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 Swan Defined Risk 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 Swan Defined i.e., Swan Defined and Massmutual Premier go up and down completely randomly.

Pair Corralation between Swan Defined and Massmutual Premier

Assuming the 90 days horizon Swan Defined is expected to generate 1.39 times less return on investment than Massmutual Premier. In addition to that, Swan Defined is 1.64 times more volatile than Massmutual Premier Diversified. It trades about 0.07 of its total potential returns per unit of risk. Massmutual Premier Diversified is currently generating about 0.16 per unit of volatility. If you would invest  801.00  in Massmutual Premier Diversified on December 23, 2024 and sell it today you would earn a total of  24.00  from holding Massmutual Premier Diversified or generate 3.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.97%
Values	Daily Returns

Swan Defined Risk  vs.  Massmutual Premier Diversified

Swan Defined Risk

Risk-Adjusted Performance

Modest

Over the last 90 days Swan Defined Risk has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Swan Defined 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Premier Diversified are ranked lower than 12 (%) 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 Swan Defined and Massmutual Premier

The main advantage of trading using opposite Swan Defined and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swan Defined 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 Swan Defined Risk 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.