Correlation Between Ginnie Mae and Schwab California
Can any of the company-specific risk be diversified away by investing in both Ginnie Mae and Schwab California 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 Schwab California 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 Schwab California Tax Free, you can compare the effects of market volatilities on Ginnie Mae and Schwab California 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 Schwab California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ginnie Mae and Schwab California.
Diversification Opportunities for Ginnie Mae and Schwab California
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ginnie and Schwab is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ginnie Mae Fund and Schwab California Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab California Tax 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 Schwab California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab California Tax has no effect on the direction of Ginnie Mae i.e., Ginnie Mae and Schwab California go up and down completely randomly.
Pair Corralation between Ginnie Mae and Schwab California
Assuming the 90 days horizon Ginnie Mae Fund is expected to generate 1.43 times more return on investment than Schwab California. However, Ginnie Mae is 1.43 times more volatile than Schwab California Tax Free. It trades about 0.12 of its potential returns per unit of risk. Schwab California Tax Free is currently generating about 0.14 per unit of risk. If you would invest 883.00 in Ginnie Mae Fund on August 28, 2024 and sell it today you would earn a total of 8.00 from holding Ginnie Mae Fund or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ginnie Mae Fund vs. Schwab California Tax Free
Performance |
| Timeline |
| Ginnie Mae Fund |
| Schwab California Tax |
Ginnie Mae and Schwab California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ginnie Mae and Schwab California
The main advantage of trading using opposite Ginnie Mae and Schwab California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ginnie Mae position performs unexpectedly, Schwab California 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 Schwab California will offset losses from the drop in Schwab California'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 |
| Schwab California vs. Fidelity Small Cap | Schwab California vs. Ultramid Cap Profund Ultramid Cap | Schwab California vs. Victory Rs Partners | Schwab California vs. Heartland Value Plus |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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