Correlation Between Matson Money and Blue Chip

Can any of the company-specific risk be diversified away by investing in both Matson 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 Matson 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 Matson Money Equity and Blue Chip Fund, you can compare the effects of market volatilities on Matson 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 Matson Money with a short position of Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson Money and Blue Chip.

Diversification Opportunities for Matson Money and Blue Chip

0.51

Correlation Coefficient

Matson Money  Blue Chip

Very weak diversification

The 3 months correlation between Matson and Blue is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity 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 Matson 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 Matson Money Equity 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 Matson Money i.e., Matson Money and Blue Chip go up and down completely randomly.

Pair Corralation between Matson Money and Blue Chip

Assuming the 90 days horizon Matson Money Equity is expected to under-perform the Blue Chip. But the mutual fund apears to be less risky and, when comparing its historical volatility, Matson Money Equity is 1.08 times less risky than Blue Chip. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Blue Chip Fund is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,542  in Blue Chip Fund on December 28, 2024 and sell it today you would lose (125.00) from holding Blue Chip Fund or give up 2.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Matson Money Equity  vs.  Blue Chip Fund

Matson Money Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matson Money Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Matson Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blue Chip Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Chip Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Blue Chip is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Matson Money and Blue Chip

The main advantage of trading using opposite Matson Money and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson 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.

The idea behind Matson Money Equity and Blue Chip Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.