Correlation Between Gnma Fund and Commodityrealreturn

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

By analyzing existing cross correlation between Gnma Fund Institutional and Commodityrealreturn Strategy Fund, you can compare the effects of market volatilities on Gnma Fund and Commodityrealreturn 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 Gnma Fund with a short position of Commodityrealreturn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gnma Fund and Commodityrealreturn.

Diversification Opportunities for Gnma Fund and Commodityrealreturn

0.5

Correlation Coefficient

Gnma Fund  Commodityrealreturn

Very weak diversification

The 3 months correlation between Gnma and Commodityrealreturn is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gnma Fund Institutional and Commodityrealreturn Strategy F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodityrealreturn and Gnma Fund 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 Gnma Fund Institutional are associated (or correlated) with Commodityrealreturn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodityrealreturn has no effect on the direction of Gnma Fund i.e., Gnma Fund and Commodityrealreturn go up and down completely randomly.

Pair Corralation between Gnma Fund and Commodityrealreturn

Assuming the 90 days horizon Gnma Fund is expected to generate 3.77 times less return on investment than Commodityrealreturn. But when comparing it to its historical volatility, Gnma Fund Institutional is 2.22 times less risky than Commodityrealreturn. It trades about 0.02 of its potential returns per unit of risk. Commodityrealreturn Strategy Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,213  in Commodityrealreturn Strategy Fund on September 20, 2024 and sell it today you would earn a total of  86.00  from holding Commodityrealreturn Strategy Fund or generate 7.09% return on investment over 90 days.

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

Gnma Fund Institutional  vs.  Commodityrealreturn Strategy F

Gnma Fund Institutional

Risk-Adjusted Performance

0 of 100

Very Weak

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

Commodityrealreturn

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gnma Fund and Commodityrealreturn

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

The idea behind Gnma Fund Institutional and Commodityrealreturn Strategy Fund 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.