Correlation Between General Money and Inflation Protected

Can any of the company-specific risk be diversified away by investing in both General Money and Inflation Protected 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 General Money and Inflation Protected into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Money Market and Inflation Protected Bond Fund, you can compare the effects of market volatilities on General Money and Inflation Protected 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 General Money with a short position of Inflation Protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Inflation Protected.

Diversification Opportunities for General Money and Inflation Protected

0.0

Correlation Coefficient

General Money  Inflation Protected

Pay attention - limited upside

The 3 months correlation between General and Inflation is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected and General 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 General Money Market are associated (or correlated) with Inflation Protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of General Money i.e., General Money and Inflation Protected go up and down completely randomly.

Pair Corralation between General Money and Inflation Protected

If you would invest  100.00  in General Money Market on December 2, 2024 and sell it today you would earn a total of  0.00  from holding General Money Market or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

General Money Market  vs.  Inflation Protected Bond Fund

General Money Market

Risk-Adjusted Performance

Very Weak

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

Inflation Protected

Risk-Adjusted Performance

Very Weak

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

Pair Trading with General Money and Inflation Protected

The main advantage of trading using opposite General Money and Inflation Protected positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Inflation Protected 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 Inflation Protected will offset losses from the drop in Inflation Protected's long position.

The idea behind General Money Market and Inflation Protected Bond 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.