Correlation Between Cref Money and Intermediate Government

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

Diversification Opportunities for Cref Money and Intermediate Government

0.79

Correlation Coefficient

Cref Money  Intermediate Government

Poor diversification

The 3 months correlation between Cref and Intermediate is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cref Money Market and Intermediate Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Government 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 Intermediate Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Government has no effect on the direction of Cref Money i.e., Cref Money and Intermediate Government go up and down completely randomly.

Pair Corralation between Cref Money and Intermediate Government

Assuming the 90 days trading horizon Cref Money Market is expected to generate 0.15 times more return on investment than Intermediate Government. However, Cref Money Market is 6.69 times less risky than Intermediate Government. It trades about 0.95 of its potential returns per unit of risk. Intermediate Government Bond is currently generating about 0.02 per unit of risk. If you would invest  3,025  in Cref Money Market on April 30, 2025 and sell it today you would earn a total of  31.00  from holding Cref Money Market or generate 1.02% return on investment over 90 days.

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

Cref Money Market  vs.  Intermediate Government Bond

Cref Money Market

Risk-Adjusted Performance

Market Crasher

Over the last 90 days Cref Money Market has generated negative risk-adjusted returns adding no value to fund investors. 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.

Intermediate Government

Risk-Adjusted Performance

Weak

Over the last 90 days Intermediate Government Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Intermediate Government 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 Intermediate Government

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

The idea behind Cref Money Market and Intermediate Government Bond 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.