Correlation Between High-yield Municipal and Ginnie Mae
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Ginnie Mae 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 High-yield Municipal and Ginnie Mae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and Ginnie Mae Fund, you can compare the effects of market volatilities on High-yield Municipal and Ginnie Mae 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 High-yield Municipal with a short position of Ginnie Mae. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Ginnie Mae.
Diversification Opportunities for High-yield Municipal and Ginnie Mae
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High-yield and Ginnie is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Ginnie Mae Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ginnie Mae Fund and High-yield Municipal 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 High Yield Municipal Fund are associated (or correlated) with Ginnie Mae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ginnie Mae Fund has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Ginnie Mae go up and down completely randomly.
Pair Corralation between High-yield Municipal and Ginnie Mae
Assuming the 90 days horizon High-yield Municipal is expected to generate 49.25 times less return on investment than Ginnie Mae. But when comparing it to its historical volatility, High Yield Municipal Fund is 1.23 times less risky than Ginnie Mae. It trades about 0.0 of its potential returns per unit of risk. Ginnie Mae Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 871.00 in Ginnie Mae Fund on October 22, 2024 and sell it today you would earn a total of 3.00 from holding Ginnie Mae Fund or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Ginnie Mae Fund
Performance |
| Timeline |
| High Yield Municipal |
| Ginnie Mae Fund |
High-yield Municipal and Ginnie Mae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Ginnie Mae
The main advantage of trading using opposite High-yield Municipal and Ginnie Mae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Ginnie Mae 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 Ginnie Mae will offset losses from the drop in Ginnie Mae's long position.| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
| Ginnie Mae vs. Inflation Adjusted Bond Fund | Ginnie Mae vs. Government Bond Fund | Ginnie Mae vs. Income Growth Fund | Ginnie Mae vs. Equity Growth Fund |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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