Correlation Between Aig Government and Matson Money
Can any of the company-specific risk be diversified away by investing in both Aig Government 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 Aig Government and Matson Money into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Matson Money Equity, you can compare the effects of market volatilities on Aig Government 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 Aig Government with a short position of Matson Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Matson Money.
Diversification Opportunities for Aig Government and Matson Money
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aig and Matson is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money 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 Aig Government 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 Aig Government Money 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 Aig Government i.e., Aig Government and Matson Money go up and down completely randomly.
Pair Corralation between Aig Government and Matson Money
Assuming the 90 days horizon Aig Government is expected to generate 5.0 times less return on investment than Matson Money. But when comparing it to its historical volatility, Aig Government Money is 5.68 times less risky than Matson Money. It trades about 0.12 of its potential returns per unit of risk. Matson Money Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,300 in Matson Money Equity on September 3, 2024 and sell it today you would earn a total of 474.00 from holding Matson Money Equity or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aig Government Money vs. Matson Money Equity
Performance |
| Timeline |
| Aig Government Money |
| Matson Money Equity |
Aig Government and Matson Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Matson Money
The main advantage of trading using opposite Aig Government and Matson Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government 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.| Aig Government vs. Nuveen Massachusetts Municipal | Aig Government vs. Nuveen Massachusetts Municipal | Aig Government vs. Mfs Massachusetts Municipal |
| Matson Money vs. Goldman Sachs Growth | Matson Money vs. Small Pany Growth | Matson Money vs. Rational Defensive Growth | Matson Money vs. William Blair Growth |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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