Correlation Between Cref Money and American High

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

By analyzing existing cross correlation between Cref Money Market and American High Income Municipal, you can compare the effects of market volatilities on Cref Money and American High 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 Cref Money with a short position of American High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Money and American High.

Diversification Opportunities for Cref Money and American High

0.59

Correlation Coefficient

Cref Money  American High

Very weak diversification

The 3 months correlation between Cref and American is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cref Money Market and American High Income Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income and Cref 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 Cref Money Market are associated (or correlated) with American High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Cref Money i.e., Cref Money and American High go up and down completely randomly.

Pair Corralation between Cref Money and American High

Assuming the 90 days trading horizon Cref Money Market is expected to generate 0.07 times more return on investment than American High. However, Cref Money Market is 15.15 times less risky than American High. It trades about 0.99 of its potential returns per unit of risk. American High Income Municipal is currently generating about 0.01 per unit of risk. If you would invest  2,982  in Cref Money Market on December 30, 2024 and sell it today you would earn a total of  31.00  from holding Cref Money Market or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cref Money Market  vs.  American High Income Municipal

Cref Money Market

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Cref Money Market are ranked lower than 78 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Cref Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American High Income

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cref Money and American High

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

The idea behind Cref Money Market and American High Income Municipal 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.