Correlation Between Ginnie Mae and American Century
Can any of the company-specific risk be diversified away by investing in both Ginnie Mae and American Century 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 American Century 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 American Century High, you can compare the effects of market volatilities on Ginnie Mae and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ginnie Mae and American Century.
Diversification Opportunities for Ginnie Mae and American Century
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ginnie and American is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ginnie Mae Fund and American Century High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century High 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century High has no effect on the direction of Ginnie Mae i.e., Ginnie Mae and American Century go up and down completely randomly.
Pair Corralation between Ginnie Mae and American Century
Assuming the 90 days horizon Ginnie Mae Fund is expected to generate 2.06 times more return on investment than American Century. However, Ginnie Mae is 2.06 times more volatile than American Century High. It trades about 0.18 of its potential returns per unit of risk. American Century High is currently generating about 0.08 per unit of risk. If you would invest 883.00 in Ginnie Mae Fund on September 14, 2024 and sell it today you would earn a total of 9.00 from holding Ginnie Mae Fund or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ginnie Mae Fund vs. American Century High
Performance |
| Timeline |
| Ginnie Mae Fund |
| American Century High |
Ginnie Mae and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ginnie Mae and American Century
The main advantage of trading using opposite Ginnie Mae and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ginnie Mae position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century'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 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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