Correlation Between Visa and Massmutual Premier

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

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

Diversification Opportunities for Visa and Massmutual Premier

0.08

Correlation Coefficient

Visa  Massmutual Premier

Significant diversification

The 3 months correlation between Visa and Massmutual is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Massmutual Premier Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier and Visa 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 Visa Class A 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 Visa i.e., Visa and Massmutual Premier go up and down completely randomly.

Pair Corralation between Visa and Massmutual Premier

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.92 times more return on investment than Massmutual Premier. However, Visa Class A is 1.09 times less risky than Massmutual Premier. It trades about 0.09 of its potential returns per unit of risk. Massmutual Premier Disciplined is currently generating about 0.02 per unit of risk. If you would invest  20,419  in Visa Class A on September 21, 2024 and sell it today you would earn a total of  11,069  from holding Visa Class A or generate 54.21% return on investment over 90 days.

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

Visa Class A  vs.  Massmutual Premier Disciplined

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Massmutual Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Massmutual Premier Disciplined 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Visa and Massmutual Premier

The main advantage of trading using opposite Visa and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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 Visa Class A and Massmutual Premier Disciplined 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.