Correlation Between Western Asset and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Massmutual Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Massmutual Select Diversified, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Massmutual Select.
Diversification Opportunities for Western Asset and Massmutual Select
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Massmutual is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Massmutual Select Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select and Western Asset 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 Western Asset Diversified 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 has no effect on the direction of Western Asset i.e., Western Asset and Massmutual Select go up and down completely randomly.
Pair Corralation between Western Asset and Massmutual Select
Assuming the 90 days horizon Western Asset Diversified is expected to generate 0.47 times more return on investment than Massmutual Select. However, Western Asset Diversified is 2.15 times less risky than Massmutual Select. It trades about 0.05 of its potential returns per unit of risk. Massmutual Select Diversified is currently generating about -0.13 per unit of risk. If you would invest 1,549 in Western Asset Diversified on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Western Asset Diversified or generate 0.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Western Asset Diversified vs. Massmutual Select Diversified
Performance |
Timeline |
Western Asset Diversified |
Massmutual Select |
Western Asset and Massmutual Select Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and Massmutual Select
The main advantage of trading using opposite Western Asset and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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Check out your portfolio center.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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