Correlation Between Hewitt Money and Tsmxx

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

Diversification Opportunities for Hewitt Money and Tsmxx

0.0

Correlation Coefficient

Hewitt Money  Tsmxx

Pay attention - limited upside

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

Pair Corralation between Hewitt Money and Tsmxx

Assuming the 90 days horizon Hewitt Money is expected to generate 318.29 times less return on investment than Tsmxx. But when comparing it to its historical volatility, Hewitt Money Market is 79.06 times less risky than Tsmxx. It trades about 0.03 of its potential returns per unit of risk. Tsmxx is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  512.00  in Tsmxx on October 10, 2024 and sell it today you would lose (412.00) from holding Tsmxx or give up 80.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	52.89%
Values	Daily Returns

Hewitt Money Market  vs.  Tsmxx

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.

Tsmxx

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tsmxx are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tsmxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hewitt Money and Tsmxx

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

The idea behind Hewitt Money Market and Tsmxx 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 Global Correlations module to find global opportunities by holding instruments from different markets.