Correlation Between General Money and Intermediate Term
Can any of the company-specific risk be diversified away by investing in both General Money and Intermediate Term 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 Intermediate Term 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 Intermediate Term Tax Free Bond, you can compare the effects of market volatilities on General Money and Intermediate Term 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 Intermediate Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Intermediate Term.
Diversification Opportunities for General Money and Intermediate Term
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between General and Intermediate is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Intermediate Term Tax Free Bon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Tax 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 Intermediate Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Tax has no effect on the direction of General Money i.e., General Money and Intermediate Term go up and down completely randomly.
Pair Corralation between General Money and Intermediate Term
If you would invest 1,076 in Intermediate Term Tax Free Bond on September 13, 2024 and sell it today you would earn a total of 9.00 from holding Intermediate Term Tax Free Bond or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Money Market vs. Intermediate Term Tax Free Bon
Performance |
| Timeline |
| General Money Market |
| Intermediate Term Tax |
General Money and Intermediate Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Money and Intermediate Term
The main advantage of trading using opposite General Money and Intermediate Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Intermediate Term 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 Intermediate Term will offset losses from the drop in Intermediate Term'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 |
| Intermediate Term vs. Us High Relative | Intermediate Term vs. Morningstar Aggressive Growth | Intermediate Term vs. Fa 529 Aggressive | Intermediate Term vs. Intal High Relative |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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