Correlation Between Tax-free Conservative and Massmutual Retiresmart

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

By analyzing existing cross correlation between Tax Free Conservative Income and Massmutual Retiresmart Moderate, you can compare the effects of market volatilities on Tax-free Conservative and Massmutual Retiresmart 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 Tax-free Conservative with a short position of Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tax-free Conservative and Massmutual Retiresmart.

Diversification Opportunities for Tax-free Conservative and Massmutual Retiresmart

-0.19

Correlation Coefficient

Tax-free Conservative  Massmutual Retiresmart

Good diversification

The 3 months correlation between Tax-free and Massmutual is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tax Free Conservative Income and Massmutual Retiresmart Moderat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart and Tax-free Conservative 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 Tax Free Conservative Income are associated (or correlated) with Massmutual Retiresmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Retiresmart has no effect on the direction of Tax-free Conservative i.e., Tax-free Conservative and Massmutual Retiresmart go up and down completely randomly.

Pair Corralation between Tax-free Conservative and Massmutual Retiresmart

Assuming the 90 days horizon Tax-free Conservative is expected to generate 1.76 times less return on investment than Massmutual Retiresmart. But when comparing it to its historical volatility, Tax Free Conservative Income is 7.75 times less risky than Massmutual Retiresmart. It trades about 0.2 of its potential returns per unit of risk. Massmutual Retiresmart Moderate is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  806.00  in Massmutual Retiresmart Moderate on October 3, 2024 and sell it today you would earn a total of  83.00  from holding Massmutual Retiresmart Moderate or generate 10.3% return on investment over 90 days.

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

Tax Free Conservative Income  vs.  Massmutual Retiresmart Moderat

Tax Free Conservative

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Free Conservative Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tax-free Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Massmutual Retiresmart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Retiresmart Moderate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Massmutual Retiresmart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tax-free Conservative and Massmutual Retiresmart

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

The idea behind Tax Free Conservative Income and Massmutual Retiresmart Moderate 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.