Correlation Between Ginnie Mae and Utilities Fund
Can any of the company-specific risk be diversified away by investing in both Ginnie Mae and Utilities Fund 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 Ginnie Mae and Utilities Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ginnie Mae Fund and Utilities Fund Investor, you can compare the effects of market volatilities on Ginnie Mae and Utilities Fund 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 Ginnie Mae with a short position of Utilities Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ginnie Mae and Utilities Fund.
Diversification Opportunities for Ginnie Mae and Utilities Fund
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ginnie and Utilities is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ginnie Mae Fund and Utilities Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Fund Investor and Ginnie Mae 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 Ginnie Mae Fund are associated (or correlated) with Utilities Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Fund Investor has no effect on the direction of Ginnie Mae i.e., Ginnie Mae and Utilities Fund go up and down completely randomly.
Pair Corralation between Ginnie Mae and Utilities Fund
Assuming the 90 days horizon Ginnie Mae Fund is expected to under-perform the Utilities Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ginnie Mae Fund is 3.4 times less risky than Utilities Fund. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Utilities Fund Investor is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,822 in Utilities Fund Investor on September 17, 2024 and sell it today you would lose (15.00) from holding Utilities Fund Investor or give up 0.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Ginnie Mae Fund vs. Utilities Fund Investor
Performance |
Timeline |
Ginnie Mae Fund |
Utilities Fund Investor |
Ginnie Mae and Utilities Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ginnie Mae and Utilities Fund
The main advantage of trading using opposite Ginnie Mae and Utilities Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ginnie Mae position performs unexpectedly, Utilities Fund 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 Utilities Fund will offset losses from the drop in Utilities Fund's long position.Ginnie Mae vs. Mid Cap Value | Ginnie Mae vs. Equity Growth Fund | Ginnie Mae vs. Income Growth Fund | Ginnie Mae vs. Diversified Bond Fund |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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