Correlation Between Secured Options and Gateway Fund
Can any of the company-specific risk be diversified away by investing in both Secured Options and Gateway 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 Secured Options and Gateway Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Secured Options Portfolio and Gateway Fund Class, you can compare the effects of market volatilities on Secured Options and Gateway 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 Secured Options with a short position of Gateway Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secured Options and Gateway Fund.
Diversification Opportunities for Secured Options and Gateway Fund
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Secured and Gateway is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Secured Options Portfolio and Gateway Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Fund Class and Secured Options 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 Secured Options Portfolio are associated (or correlated) with Gateway Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Fund Class has no effect on the direction of Secured Options i.e., Secured Options and Gateway Fund go up and down completely randomly.
Pair Corralation between Secured Options and Gateway Fund
Assuming the 90 days horizon Secured Options is expected to generate 1.26 times less return on investment than Gateway Fund. But when comparing it to its historical volatility, Secured Options Portfolio is 2.02 times less risky than Gateway Fund. It trades about 0.59 of its potential returns per unit of risk. Gateway Fund Class is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 4,482 in Gateway Fund Class on September 1, 2024 and sell it today you would earn a total of 168.00 from holding Gateway Fund Class or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Secured Options Portfolio vs. Gateway Fund Class
Performance |
| Timeline |
| Secured Options Portfolio |
| Gateway Fund Class |
Secured Options and Gateway Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Secured Options and Gateway Fund
The main advantage of trading using opposite Secured Options and Gateway Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Secured Options position performs unexpectedly, Gateway 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 Gateway Fund will offset losses from the drop in Gateway Fund's long position.| Secured Options vs. Small Cap Equity | Secured Options vs. Matthews Pacific Tiger | Secured Options vs. Large Cap E | Secured Options vs. Longshort Portfolio Longshort |
| Gateway Fund vs. Aqr Managed Futures | Gateway Fund vs. Western Asset Inflation | Gateway Fund vs. American Funds Inflation | Gateway Fund vs. Aqr Managed Futures |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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