Correlation Between Cref Money and Blue Chip
Can any of the company-specific risk be diversified away by investing in both Cref 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 Cref 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 Cref Money Market and Blue Chip Fund, you can compare the effects of market volatilities on Cref 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 Cref Money with a short position of Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Money and Blue Chip.
Diversification Opportunities for Cref Money and Blue Chip
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cref and Blue is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cref Money Market and Blue Chip Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Fund 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 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 Fund has no effect on the direction of Cref Money i.e., Cref Money and Blue Chip go up and down completely randomly.
Pair Corralation between Cref Money and Blue Chip
Assuming the 90 days trading horizon Cref Money is expected to generate 4.68 times less return on investment than Blue Chip. But when comparing it to its historical volatility, Cref Money Market is 41.37 times less risky than Blue Chip. It trades about 0.96 of its potential returns per unit of risk. Blue Chip Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,812 in Blue Chip Fund on September 12, 2024 and sell it today you would earn a total of 904.00 from holding Blue Chip Fund or generate 23.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.36% |
| Values | Daily Returns |
Cref Money Market vs. Blue Chip Fund
Performance |
| Timeline |
| Cref Money Market |
| Blue Chip Fund |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Cref Money and Blue Chip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Money and Blue Chip
The main advantage of trading using opposite Cref Money and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref 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.| Cref Money vs. Vanguard Total Stock | Cref Money vs. Vanguard 500 Index | Cref Money vs. Vanguard Total Stock | Cref Money vs. Vanguard Total Stock |
| Blue Chip vs. Ubs Money Series | Blue Chip vs. Franklin Government Money | Blue Chip vs. Elfun Government Money | Blue Chip vs. Cref Money Market |
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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