Correlation Between Voya Real and Massmutual Select

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

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

Diversification Opportunities for Voya Real and Massmutual Select

0.71

Correlation Coefficient

Voya Real  Massmutual Select

Poor diversification

The 3 months correlation between Voya and Massmutual is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Voya Real Estate 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 Voya Real 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 Voya Real Estate 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 Voya Real i.e., Voya Real and Massmutual Select go up and down completely randomly.

Pair Corralation between Voya Real and Massmutual Select

Assuming the 90 days horizon Voya Real is expected to generate 1.83 times less return on investment than Massmutual Select. In addition to that, Voya Real is 2.93 times more volatile than Massmutual Select Total. It trades about 0.03 of its total potential returns per unit of risk. Massmutual Select Total is currently generating about 0.17 per unit of volatility. If you would invest  816.00  in Massmutual Select Total on December 22, 2024 and sell it today you would earn a total of  29.00  from holding Massmutual Select Total or generate 3.55% return on investment over 90 days.

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

Voya Real Estate  vs.  Massmutual Select Total

Voya Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Real Estate are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical 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 Voya Real and Massmutual Select

The main advantage of trading using opposite Voya Real and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Real 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 Voya Real Estate 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.