Correlation Between Diversified Bond and Ginnie Mae
Can any of the company-specific risk be diversified away by investing in both Diversified Bond and Ginnie Mae 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 Diversified Bond and Ginnie Mae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Bond Fund and Ginnie Mae Fund, you can compare the effects of market volatilities on Diversified Bond and Ginnie Mae 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 Diversified Bond with a short position of Ginnie Mae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Bond and Ginnie Mae.
Diversification Opportunities for Diversified Bond and Ginnie Mae
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Diversified and Ginnie is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Bond Fund and Ginnie Mae Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ginnie Mae Fund and Diversified Bond 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 Diversified Bond Fund are associated (or correlated) with Ginnie Mae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ginnie Mae Fund has no effect on the direction of Diversified Bond i.e., Diversified Bond and Ginnie Mae go up and down completely randomly.
Pair Corralation between Diversified Bond and Ginnie Mae
Assuming the 90 days horizon Diversified Bond Fund is expected to under-perform the Ginnie Mae. But the mutual fund apears to be less risky and, when comparing its historical volatility, Diversified Bond Fund is 1.01 times less risky than Ginnie Mae. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Ginnie Mae Fund is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 896.00 in Ginnie Mae Fund on September 13, 2024 and sell it today you would lose (4.00) from holding Ginnie Mae Fund or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Bond Fund vs. Ginnie Mae Fund
Performance |
| Timeline |
| Diversified Bond |
| Ginnie Mae Fund |
Diversified Bond and Ginnie Mae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Bond and Ginnie Mae
The main advantage of trading using opposite Diversified Bond and Ginnie Mae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Bond position performs unexpectedly, Ginnie Mae 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 Ginnie Mae will offset losses from the drop in Ginnie Mae's long position.| Diversified Bond vs. Extended Market Index | Diversified Bond vs. Siit Emerging Markets | Diversified Bond vs. Ab All Market | Diversified Bond vs. Calvert Developed Market |
| Ginnie Mae vs. Mid Cap Value | Ginnie Mae vs. Equity Growth Fund | Ginnie Mae vs. Income Growth Fund | Ginnie Mae vs. Diversified Bond Fund |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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