Correlation Between Hewitt Money and Strengthening Dollar

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

By analyzing existing cross correlation between Hewitt Money Market and Strengthening Dollar 2x, you can compare the effects of market volatilities on Hewitt Money and Strengthening Dollar 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 Hewitt Money with a short position of Strengthening Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewitt Money and Strengthening Dollar.

Diversification Opportunities for Hewitt Money and Strengthening Dollar

0.0

Correlation Coefficient

Hewitt Money  Strengthening Dollar

Pay attention - limited upside

The 3 months correlation between Hewitt and Strengthening is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hewitt Money Market and Strengthening Dollar 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strengthening Dollar and Hewitt 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 Hewitt Money Market are associated (or correlated) with Strengthening Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strengthening Dollar has no effect on the direction of Hewitt Money i.e., Hewitt Money and Strengthening Dollar go up and down completely randomly.

Pair Corralation between Hewitt Money and Strengthening Dollar

Assuming the 90 days horizon Hewitt Money is expected to generate 2.32 times less return on investment than Strengthening Dollar. But when comparing it to its historical volatility, Hewitt Money Market is 1.12 times less risky than Strengthening Dollar. It trades about 0.03 of its potential returns per unit of risk. Strengthening Dollar 2x is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,576  in Strengthening Dollar 2x on October 10, 2024 and sell it today you would earn a total of  1,259  from holding Strengthening Dollar 2x or generate 22.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.8%
Values	Daily Returns

Hewitt Money Market  vs.  Strengthening Dollar 2x

Hewitt Money Market

Risk-Adjusted Performance

0 of 100

Very Weak

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

Strengthening Dollar

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strengthening Dollar 2x are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Strengthening Dollar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hewitt Money and Strengthening Dollar

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

The idea behind Hewitt Money Market and Strengthening Dollar 2x 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.