Correlation Between General Money and Inflation Protected
Can any of the company-specific risk be diversified away by investing in both General Money and Inflation Protected 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 Inflation Protected 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 Inflation Protected Bond Fund, you can compare the effects of market volatilities on General Money and Inflation Protected 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 Inflation Protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Inflation Protected.
Diversification Opportunities for General Money and Inflation Protected
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between General and Inflation is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Inflation Protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of General Money i.e., General Money and Inflation Protected go up and down completely randomly.
Pair Corralation between General Money and Inflation Protected
Assuming the 90 days horizon General Money is expected to generate 1.44 times less return on investment than Inflation Protected. In addition to that, General Money is 1.97 times more volatile than Inflation Protected Bond Fund. It trades about 0.02 of its total potential returns per unit of risk. Inflation Protected Bond Fund is currently generating about 0.07 per unit of volatility. If you would invest 919.00 in Inflation Protected Bond Fund on September 3, 2024 and sell it today you would earn a total of 137.00 from holding Inflation Protected Bond Fund or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.21% |
| Values | Daily Returns |
General Money Market vs. Inflation Protected Bond Fund
Performance |
| Timeline |
| General Money Market |
| Inflation Protected |
General Money and Inflation Protected Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Money and Inflation Protected
The main advantage of trading using opposite General Money and Inflation Protected positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Inflation Protected 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 Inflation Protected will offset losses from the drop in Inflation Protected's long position.| General Money vs. Vanguard Total Stock | General Money vs. Vanguard 500 Index | General Money vs. Vanguard Total Stock | General Money vs. Vanguard Total Stock |
| Inflation Protected vs. First American Funds | Inflation Protected vs. Hsbc Treasury Money | Inflation Protected vs. Janus Investment | Inflation Protected vs. General Money Market |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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