Correlation Between SOL and Massmutual Retiresmart
Can any of the company-specific risk be diversified away by investing in both SOL 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 SOL and Massmutual Retiresmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOL and Massmutual Retiresmart Moderate, you can compare the effects of market volatilities on SOL 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 SOL with a short position of Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOL and Massmutual Retiresmart.
Diversification Opportunities for SOL and Massmutual Retiresmart
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between SOL and Massmutual is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SOL and Massmutual Retiresmart Moderat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart and SOL 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 SOL 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 SOL i.e., SOL and Massmutual Retiresmart go up and down completely randomly.
Pair Corralation between SOL and Massmutual Retiresmart
Assuming the 90 days trading horizon SOL is expected to generate 12.69 times more return on investment than Massmutual Retiresmart. However, SOL is 12.69 times more volatile than Massmutual Retiresmart Moderate. It trades about 0.1 of its potential returns per unit of risk. Massmutual Retiresmart Moderate is currently generating about 0.27 per unit of risk. If you would invest 15,092 in SOL on April 24, 2025 and sell it today you would earn a total of 3,824 from holding SOL or generate 25.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.38% |
| Values | Daily Returns |
SOL vs. Massmutual Retiresmart Moderat
Performance |
| Timeline |
| SOL |
| Massmutual Retiresmart |
SOL and Massmutual Retiresmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOL and Massmutual Retiresmart
The main advantage of trading using opposite SOL and Massmutual Retiresmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOL 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 SOL and Massmutual Retiresmart Moderate 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.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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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