Correlation Between Cref Money and Foreign Bond
Can any of the company-specific risk be diversified away by investing in both Cref Money and Foreign Bond 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 Cref Money and Foreign Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Money Market and Foreign Bond Fund, you can compare the effects of market volatilities on Cref Money and Foreign Bond 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 Cref Money with a short position of Foreign Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Money and Foreign Bond.
Diversification Opportunities for Cref Money and Foreign Bond
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cref and Foreign is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cref Money Market and Foreign Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Bond and Cref 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 Cref Money Market are associated (or correlated) with Foreign Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Bond has no effect on the direction of Cref Money i.e., Cref Money and Foreign Bond go up and down completely randomly.
Pair Corralation between Cref Money and Foreign Bond
Assuming the 90 days trading horizon Cref Money Market is expected to generate 0.04 times more return on investment than Foreign Bond. However, Cref Money Market is 25.9 times less risky than Foreign Bond. It trades about 1.09 of its potential returns per unit of risk. Foreign Bond Fund is currently generating about 0.04 per unit of risk. If you would invest 2,980 in Cref Money Market on October 25, 2024 and sell it today you would earn a total of 10.00 from holding Cref Money Market or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cref Money Market vs. Foreign Bond Fund
Performance |
| Timeline |
| Cref Money Market |
| Foreign Bond |
Cref Money and Foreign Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Money and Foreign Bond
The main advantage of trading using opposite Cref Money and Foreign Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Money position performs unexpectedly, Foreign Bond 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 Foreign Bond will offset losses from the drop in Foreign Bond's long position.| Cref Money vs. Hsbc Government Money | Cref Money vs. Schwab Government Money | Cref Money vs. Dreyfus Government Cash | Cref Money vs. Payden Government Fund |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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