Correlation Between General Money and Small Cap
Can any of the company-specific risk be diversified away by investing in both General Money and Small Cap 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 General Money and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Money Market and Small Cap Equity, you can compare the effects of market volatilities on General Money and Small Cap 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 General Money with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Small Cap.
Diversification Opportunities for General Money and Small Cap
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between General and Small is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity and General Money 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 General Money Market are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Equity has no effect on the direction of General Money i.e., General Money and Small Cap go up and down completely randomly.
Pair Corralation between General Money and Small Cap
If you would invest 100.00 in General Money Market on September 13, 2024 and sell it today you would earn a total of 0.00 from holding General Money Market or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Money Market vs. Small Cap Equity
Performance |
| Timeline |
| General Money Market |
| Small Cap Equity |
General Money and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Money and Small Cap
The main advantage of trading using opposite General Money and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| General Money vs. Putnam Money Market | General Money vs. Cref Money Market | General Money vs. Ab Government Exchange | General Money vs. Money Market Obligations |
| Small Cap vs. Black Oak Emerging | Small Cap vs. Transamerica Emerging Markets | Small Cap vs. Barings Emerging Markets | Small Cap vs. Dws Emerging Markets |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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