Correlation Between Investec Emerging and Massmutual Select

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

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

Diversification Opportunities for Investec Emerging and Massmutual Select

-0.32

Correlation Coefficient

Investec Emerging  Massmutual Select

Very good diversification

The 3 months correlation between Investec and Massmutual is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Massmutual Select Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Small and Investec Emerging 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 Investec Emerging Markets 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 Small has no effect on the direction of Investec Emerging i.e., Investec Emerging and Massmutual Select go up and down completely randomly.

Pair Corralation between Investec Emerging and Massmutual Select

Assuming the 90 days horizon Investec Emerging Markets is expected to under-perform the Massmutual Select. But the mutual fund apears to be less risky and, when comparing its historical volatility, Investec Emerging Markets is 1.33 times less risky than Massmutual Select. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Massmutual Select Small is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  840.00  in Massmutual Select Small on October 10, 2024 and sell it today you would earn a total of  30.00  from holding Massmutual Select Small or generate 3.57% return on investment over 90 days.

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

Investec Emerging Markets  vs.  Massmutual Select Small

Investec Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Massmutual Select Small

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Select Small are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Investec Emerging and Massmutual Select

The main advantage of trading using opposite Investec Emerging and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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 Investec Emerging Markets and Massmutual Select Small 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.