Correlation Between General Money and Blue Chip
Can any of the company-specific risk be diversified away by investing in both General Money and Blue Chip 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 Blue Chip 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 Blue Chip Growth, you can compare the effects of market volatilities on General Money and Blue Chip 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 Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Blue Chip.
Diversification Opportunities for General Money and Blue Chip
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between General and Blue is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Blue Chip Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Growth 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 Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Growth has no effect on the direction of General Money i.e., General Money and Blue Chip go up and down completely randomly.
Pair Corralation between General Money and Blue Chip
Assuming the 90 days horizon General Money is expected to generate 13.02 times less return on investment than Blue Chip. But when comparing it to its historical volatility, General Money Market is 7.1 times less risky than Blue Chip. It trades about 0.13 of its potential returns per unit of risk. Blue Chip Growth is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,816 in Blue Chip Growth on September 12, 2024 and sell it today you would earn a total of 250.00 from holding Blue Chip Growth or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Money Market vs. Blue Chip Growth
Performance |
| Timeline |
| General Money Market |
| Blue Chip Growth |
General Money and Blue Chip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Money and Blue Chip
The main advantage of trading using opposite General Money and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Blue Chip 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 Blue Chip will offset losses from the drop in Blue Chip'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 |
| Blue Chip vs. Icon Natural Resources | Blue Chip vs. Gamco Natural Resources | Blue Chip vs. Alpsalerian Energy Infrastructure | Blue Chip vs. Clearbridge Energy Mlp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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