Correlation Between Income Growth and Ginnie Mae
Can any of the company-specific risk be diversified away by investing in both Income Growth 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 Income Growth and Ginnie Mae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Growth Fund and Ginnie Mae Fund, you can compare the effects of market volatilities on Income Growth 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 Income Growth with a short position of Ginnie Mae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Ginnie Mae.
Diversification Opportunities for Income Growth and Ginnie Mae
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Income and Ginnie is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth 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 Income Growth 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 Income Growth 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 Income Growth i.e., Income Growth and Ginnie Mae go up and down completely randomly.
Pair Corralation between Income Growth and Ginnie Mae
Assuming the 90 days horizon Income Growth Fund is expected to generate 2.12 times more return on investment than Ginnie Mae. However, Income Growth is 2.12 times more volatile than Ginnie Mae Fund. 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 3,817 in Income Growth Fund on September 13, 2024 and sell it today you would earn a total of 33.00 from holding Income Growth Fund or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Growth Fund vs. Ginnie Mae Fund
Performance |
| Timeline |
| Income Growth |
| Ginnie Mae Fund |
Income Growth and Ginnie Mae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Growth and Ginnie Mae
The main advantage of trading using opposite Income Growth and Ginnie Mae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth 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.| Income Growth vs. Ultra Fund I | Income Growth vs. Value Fund I | Income Growth vs. Equity Growth Fund | Income Growth vs. International Growth 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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