Correlation Between General Money and Extended Market
Can any of the company-specific risk be diversified away by investing in both General Money and Extended Market 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 Extended Market 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 Extended Market Index, you can compare the effects of market volatilities on General Money and Extended Market 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 Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Extended Market.
Diversification Opportunities for General Money and Extended Market
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between General and Extended is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index 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 Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of General Money i.e., General Money and Extended Market go up and down completely randomly.
Pair Corralation between General Money and Extended Market
If you would invest 100.00 in General Money Market on September 29, 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 | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Money Market vs. Extended Market Index
Performance |
| Timeline |
| General Money Market |
| Extended Market Index |
General Money and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Money and Extended Market
The main advantage of trading using opposite General Money and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| General Money vs. Fidelity Sai Convertible | General Money vs. Allianzgi Convertible Income | General Money vs. Gabelli Convertible And | General Money vs. Advent Claymore Convertible |
| Extended Market vs. Guidemark Large Cap | Extended Market vs. Aqr Large Cap | Extended Market vs. Upright Assets Allocation | Extended Market vs. Smead Value Fund |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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