Correlation Between Versatile Bond and Massmutual Retiresmart

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

By analyzing existing cross correlation between Versatile Bond Portfolio and Massmutual Retiresmart Growth, you can compare the effects of market volatilities on Versatile Bond 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 Versatile Bond with a short position of Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versatile Bond and Massmutual Retiresmart.

Diversification Opportunities for Versatile Bond and Massmutual Retiresmart

0.58

Correlation Coefficient

Versatile Bond  Massmutual Retiresmart

Very weak diversification

The 3 months correlation between Versatile and Massmutual is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and Massmutual Retiresmart Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart and Versatile Bond 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 Versatile Bond Portfolio 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 Versatile Bond i.e., Versatile Bond and Massmutual Retiresmart go up and down completely randomly.

Pair Corralation between Versatile Bond and Massmutual Retiresmart

Assuming the 90 days horizon Versatile Bond is expected to generate 1.9 times less return on investment than Massmutual Retiresmart. But when comparing it to its historical volatility, Versatile Bond Portfolio is 5.33 times less risky than Massmutual Retiresmart. It trades about 0.17 of its potential returns per unit of risk. Massmutual Retiresmart Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  814.00  in Massmutual Retiresmart Growth on September 26, 2024 and sell it today you would earn a total of  187.00  from holding Massmutual Retiresmart Growth or generate 22.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Versatile Bond Portfolio  vs.  Massmutual Retiresmart Growth

Versatile Bond Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Versatile Bond Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Versatile Bond 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 Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Versatile Bond and Massmutual Retiresmart

The main advantage of trading using opposite Versatile Bond and Massmutual Retiresmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond 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 Versatile Bond Portfolio and Massmutual Retiresmart Growth 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.