Correlation Between Ginnie Mae and Vanguard Gnma
Can any of the company-specific risk be diversified away by investing in both Ginnie Mae and Vanguard Gnma 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 Vanguard Gnma 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 Vanguard Gnma Fund, you can compare the effects of market volatilities on Ginnie Mae and Vanguard Gnma 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 Vanguard Gnma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ginnie Mae and Vanguard Gnma.
Diversification Opportunities for Ginnie Mae and Vanguard Gnma
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Ginnie and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Ginnie Mae Fund and Vanguard Gnma Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Gnma 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 Vanguard Gnma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Gnma has no effect on the direction of Ginnie Mae i.e., Ginnie Mae and Vanguard Gnma go up and down completely randomly.
Pair Corralation between Ginnie Mae and Vanguard Gnma
Assuming the 90 days horizon Ginnie Mae is expected to generate 1.3 times less return on investment than Vanguard Gnma. In addition to that, Ginnie Mae is 1.05 times more volatile than Vanguard Gnma Fund. It trades about 0.02 of its total potential returns per unit of risk. Vanguard Gnma Fund is currently generating about 0.03 per unit of volatility. If you would invest 875.00 in Vanguard Gnma Fund on August 28, 2024 and sell it today you would earn a total of 49.00 from holding Vanguard Gnma Fund or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ginnie Mae Fund vs. Vanguard Gnma Fund
Performance |
| Timeline |
| Ginnie Mae Fund |
| Vanguard Gnma |
Ginnie Mae and Vanguard Gnma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ginnie Mae and Vanguard Gnma
The main advantage of trading using opposite Ginnie Mae and Vanguard Gnma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ginnie Mae position performs unexpectedly, Vanguard Gnma 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 Vanguard Gnma will offset losses from the drop in Vanguard Gnma'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 |
| Vanguard Gnma vs. Vanguard Materials Index | Vanguard Gnma vs. Vanguard Limited Term Tax Exempt | Vanguard Gnma vs. Vanguard Limited Term Tax Exempt | Vanguard Gnma vs. Vanguard Global Minimum |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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