Correlation Between Money Market and Matson Money
Can any of the company-specific risk be diversified away by investing in both Money Market and Matson Money 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 Money Market and Matson Money into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Money Market Obligations and Matson Money Equity, you can compare the effects of market volatilities on Money Market and Matson Money 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 Money Market with a short position of Matson Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Money Market and Matson Money.
Diversification Opportunities for Money Market and Matson Money
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Money and Matson is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Money Market Obligations and Matson Money Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Money Equity and Money Market 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 Money Market Obligations are associated (or correlated) with Matson Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Money Equity has no effect on the direction of Money Market i.e., Money Market and Matson Money go up and down completely randomly.
Pair Corralation between Money Market and Matson Money
Assuming the 90 days horizon Money Market is expected to generate 4.93 times less return on investment than Matson Money. But when comparing it to its historical volatility, Money Market Obligations is 6.84 times less risky than Matson Money. It trades about 0.14 of its potential returns per unit of risk. Matson Money Equity is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,881 in Matson Money Equity on September 14, 2024 and sell it today you would earn a total of 790.00 from holding Matson Money Equity or generate 27.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Money Market Obligations vs. Matson Money Equity
Performance |
| Timeline |
| Money Market Obligations |
| Matson Money Equity |
Money Market and Matson Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Money Market and Matson Money
The main advantage of trading using opposite Money Market and Matson Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Money Market position performs unexpectedly, Matson Money 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 Matson Money will offset losses from the drop in Matson Money's long position.| Money Market vs. Vanguard Total Stock | Money Market vs. Vanguard 500 Index | Money Market vs. Vanguard Total Stock | Money Market vs. Vanguard Total Stock |
| Matson Money vs. Fidelity Managed Retirement | Matson Money vs. Jpmorgan Smartretirement 2035 | Matson Money vs. Pro Blend Moderate Term | Matson Money vs. Putnman Retirement Ready |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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