Correlation Between Ginnie Mae and High-yield Fund
Can any of the company-specific risk be diversified away by investing in both Ginnie Mae and High-yield Fund 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 Fund 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 Fund Y, you can compare the effects of market volatilities on Ginnie Mae and High-yield Fund 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 Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ginnie Mae and High-yield Fund.
Diversification Opportunities for Ginnie Mae and High-yield Fund
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ginnie and HIGH-YIELD is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ginnie Mae Fund and High Yield Fund Y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 Fund. 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 Fund has no effect on the direction of Ginnie Mae i.e., Ginnie Mae and High-yield Fund go up and down completely randomly.
Pair Corralation between Ginnie Mae and High-yield Fund
Assuming the 90 days horizon Ginnie Mae Fund is expected to under-perform the High-yield Fund. In addition to that, Ginnie Mae is 2.14 times more volatile than High Yield Fund Y. It trades about -0.06 of its total potential returns per unit of risk. High Yield Fund Y is currently generating about 0.06 per unit of volatility. If you would invest 512.00 in High Yield Fund Y on September 5, 2024 and sell it today you would earn a total of 2.00 from holding High Yield Fund Y or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Ginnie Mae Fund vs. High Yield Fund Y
Performance |
| Timeline |
| Ginnie Mae Fund |
| High Yield Fund |
Ginnie Mae and High-yield Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ginnie Mae and High-yield Fund
The main advantage of trading using opposite Ginnie Mae and High-yield Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ginnie Mae position performs unexpectedly, High-yield Fund 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 Fund will offset losses from the drop in High-yield Fund's long position.| Ginnie Mae vs. Inflation Adjusted Bond Fund | Ginnie Mae vs. Short Term Government Fund | Ginnie Mae vs. Diversified Bond Fund | Ginnie Mae vs. Balanced Fund Investor |
| High-yield Fund vs. Lord Abbett Diversified | High-yield Fund vs. Oppenheimer International Diversified | High-yield Fund vs. Western Asset Diversified | High-yield Fund vs. Fidelity Advisor Diversified |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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