Correlation Between Ginnie Mae and High Yield
Can any of the company-specific risk be diversified away by investing in both Ginnie Mae and High Yield 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 High Yield 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 High Yield Municipal Fund, you can compare the effects of market volatilities on Ginnie Mae and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ginnie Mae and High Yield.
Diversification Opportunities for Ginnie Mae and High Yield
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ginnie and High is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ginnie Mae Fund and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Ginnie Mae i.e., Ginnie Mae and High Yield go up and down completely randomly.
Pair Corralation between Ginnie Mae and High Yield
Assuming the 90 days horizon Ginnie Mae is expected to generate 1.77 times less return on investment than High Yield. In addition to that, Ginnie Mae is 1.63 times more volatile than High Yield Municipal Fund. It trades about 0.03 of its total potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.09 per unit of volatility. If you would invest 799.00 in High Yield Municipal Fund on September 14, 2024 and sell it today you would earn a total of 104.00 from holding High Yield Municipal Fund or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ginnie Mae Fund vs. High Yield Municipal Fund
Performance |
| Timeline |
| Ginnie Mae Fund |
| High Yield Municipal |
Ginnie Mae and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ginnie Mae and High Yield
The main advantage of trading using opposite Ginnie Mae and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ginnie Mae position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| 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 |
| High Yield vs. High Yield Fund Investor | High Yield vs. Intermediate Term Tax Free Bond | High Yield vs. California High Yield Municipal | High Yield vs. T Rowe Price |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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