Correlation Between Money Market and Hewitt Money
Can any of the company-specific risk be diversified away by investing in both Money Market and Hewitt 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 Hewitt 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 Hewitt Money Market, you can compare the effects of market volatilities on Money Market and Hewitt 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 Hewitt Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Money Market and Hewitt Money.
Diversification Opportunities for Money Market and Hewitt Money
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Money and Hewitt is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Money Market Obligations and Hewitt Money Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewitt Money Market 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 Hewitt Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewitt Money Market has no effect on the direction of Money Market i.e., Money Market and Hewitt Money go up and down completely randomly.
Pair Corralation between Money Market and Hewitt Money
Assuming the 90 days horizon Money Market Obligations is expected to generate 0.78 times more return on investment than Hewitt Money. However, Money Market Obligations is 1.28 times less risky than Hewitt Money. It trades about 0.16 of its potential returns per unit of risk. Hewitt Money Market is currently generating about 0.04 per unit of risk. If you would invest 97.00 in Money Market Obligations on August 24, 2024 and sell it today you would earn a total of 3.00 from holding Money Market Obligations or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
Money Market Obligations vs. Hewitt Money Market
Performance |
| Timeline |
| Money Market Obligations |
| Hewitt Money Market |
Money Market and Hewitt Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Money Market and Hewitt Money
The main advantage of trading using opposite Money Market and Hewitt Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Money Market position performs unexpectedly, Hewitt 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 Hewitt Money will offset losses from the drop in Hewitt 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 |
| Hewitt Money vs. Vanguard Total Stock | Hewitt Money vs. Vanguard 500 Index | Hewitt Money vs. Vanguard Total Stock | Hewitt Money vs. Vanguard Total Stock |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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