Correlation Between Touchstone Large and Massmutual Premier

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

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

Diversification Opportunities for Touchstone Large and Massmutual Premier

-0.31

Correlation Coefficient

Touchstone Large  Massmutual Premier

Very good diversification

The 3 months correlation between Touchstone and Massmutual is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Massmutual Premier Short Durat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier and Touchstone Large 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 Touchstone Large Cap 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 Touchstone Large i.e., Touchstone Large and Massmutual Premier go up and down completely randomly.

Pair Corralation between Touchstone Large and Massmutual Premier

Assuming the 90 days horizon Touchstone Large Cap is expected to under-perform the Massmutual Premier. In addition to that, Touchstone Large is 6.52 times more volatile than Massmutual Premier Short Duration. It trades about -0.02 of its total potential returns per unit of risk. Massmutual Premier Short Duration is currently generating about 0.15 per unit of volatility. If you would invest  914.00  in Massmutual Premier Short Duration on October 23, 2024 and sell it today you would earn a total of  10.00  from holding Massmutual Premier Short Duration or generate 1.09% return on investment over 90 days.

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

Touchstone Large Cap  vs.  Massmutual Premier Short Durat

Touchstone Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Touchstone Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Touchstone Large 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

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Premier Short Duration are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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 Touchstone Large and Massmutual Premier

The main advantage of trading using opposite Touchstone Large and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large 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 Touchstone Large Cap and Massmutual Premier Short Duration 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.