Correlation Between Inflation Adjusted and Ginnie Mae
Can any of the company-specific risk be diversified away by investing in both Inflation Adjusted 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 Inflation Adjusted and Ginnie Mae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Adjusted Bond Fund and Ginnie Mae Fund, you can compare the effects of market volatilities on Inflation Adjusted 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 Inflation Adjusted with a short position of Ginnie Mae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Adjusted and Ginnie Mae.
Diversification Opportunities for Inflation Adjusted and Ginnie Mae
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Inflation and Ginnie is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Adjusted Bond 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 Inflation Adjusted 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 Inflation Adjusted Bond 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 Inflation Adjusted i.e., Inflation Adjusted and Ginnie Mae go up and down completely randomly.
Pair Corralation between Inflation Adjusted and Ginnie Mae
Assuming the 90 days horizon Inflation Adjusted Bond Fund is expected to generate 0.82 times more return on investment than Ginnie Mae. However, Inflation Adjusted Bond Fund is 1.22 times less risky than Ginnie Mae. It trades about 0.03 of its potential returns per unit of risk. Ginnie Mae Fund is currently generating about 0.03 per unit of risk. If you would invest 1,008 in Inflation Adjusted Bond Fund on September 13, 2024 and sell it today you would earn a total of 63.00 from holding Inflation Adjusted Bond Fund or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Adjusted Bond Fund vs. Ginnie Mae Fund
Performance |
| Timeline |
| Inflation Adjusted Bond |
| Ginnie Mae Fund |
Inflation Adjusted and Ginnie Mae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Adjusted and Ginnie Mae
The main advantage of trading using opposite Inflation Adjusted and Ginnie Mae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Adjusted 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.| Inflation Adjusted vs. Mid Cap Value | Inflation Adjusted vs. Equity Growth Fund | Inflation Adjusted vs. Income Growth Fund | Inflation Adjusted vs. Diversified Bond Fund |
| Ginnie Mae vs. Mid Cap Value | Ginnie Mae vs. Equity Growth Fund | Ginnie Mae vs. Income Growth Fund | Ginnie Mae vs. Diversified Bond 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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