Correlation Between Cref Money and American High
Can any of the company-specific risk be diversified away by investing in both Cref Money and American High 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 American High 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 American High Income, you can compare the effects of market volatilities on Cref Money and American High 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 American High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Money and American High.
Diversification Opportunities for Cref Money and American High
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cref and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cref Money Market and American High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income 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 American High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Cref Money i.e., Cref Money and American High go up and down completely randomly.
Pair Corralation between Cref Money and American High
Assuming the 90 days trading horizon Cref Money is expected to generate 2.45 times less return on investment than American High. But when comparing it to its historical volatility, Cref Money Market is 10.38 times less risky than American High. It trades about 0.97 of its potential returns per unit of risk. American High Income is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 878.00 in American High Income on September 12, 2024 and sell it today you would earn a total of 113.00 from holding American High Income or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cref Money Market vs. American High Income
Performance |
| Timeline |
| Cref Money Market |
| American High Income |
Cref Money and American High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Money and American High
The main advantage of trading using opposite Cref Money and American High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Money position performs unexpectedly, American High 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 American High will offset losses from the drop in American High'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 |
| American High vs. Ubs Money Series | American High vs. General Money Market | American High vs. Cref Money Market | American High vs. Hewitt 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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