Correlation Between General Money and Wilshire 5000

Can any of the company-specific risk be diversified away by investing in both General Money and Wilshire 5000 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 Wilshire 5000 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 Wilshire 5000 Index, you can compare the effects of market volatilities on General Money and Wilshire 5000 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 Wilshire 5000. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Wilshire 5000.

Diversification Opportunities for General Money and Wilshire 5000

0.0

Correlation Coefficient

General Money  Wilshire 5000

Pay attention - limited upside

The 3 months correlation between General and Wilshire is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Wilshire 5000 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilshire 5000 Index 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 Wilshire 5000. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilshire 5000 Index has no effect on the direction of General Money i.e., General Money and Wilshire 5000 go up and down completely randomly.

Pair Corralation between General Money and Wilshire 5000

If you would invest  100.00  in General Money Market on December 5, 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	95.16%
Values	Daily Returns

General Money Market  vs.  Wilshire 5000 Index

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.

Wilshire 5000 Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wilshire 5000 Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with General Money and Wilshire 5000

The main advantage of trading using opposite General Money and Wilshire 5000 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money position performs unexpectedly, Wilshire 5000 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 Wilshire 5000 will offset losses from the drop in Wilshire 5000's long position.

The idea behind General Money Market and Wilshire 5000 Index 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.