Correlation Between Gnma Fund and Real Return
Can any of the company-specific risk be diversified away by investing in both Gnma Fund and Real Return 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 Gnma Fund and Real Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gnma Fund Institutional and Real Return Asset, you can compare the effects of market volatilities on Gnma Fund and Real Return 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 Gnma Fund with a short position of Real Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gnma Fund and Real Return.
Diversification Opportunities for Gnma Fund and Real Return
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gnma and Real is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Gnma Fund Institutional and Real Return Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Return Asset and Gnma Fund 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 Gnma Fund Institutional are associated (or correlated) with Real Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Return Asset has no effect on the direction of Gnma Fund i.e., Gnma Fund and Real Return go up and down completely randomly.
Pair Corralation between Gnma Fund and Real Return
Assuming the 90 days horizon Gnma Fund is expected to generate 3.08 times less return on investment than Real Return. But when comparing it to its historical volatility, Gnma Fund Institutional is 1.69 times less risky than Real Return. It trades about 0.22 of its potential returns per unit of risk. Real Return Asset is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,146 in Real Return Asset on November 9, 2024 and sell it today you would earn a total of 63.00 from holding Real Return Asset or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gnma Fund Institutional vs. Real Return Asset
Performance |
| Timeline |
| Gnma Fund Institutional |
| Real Return Asset |
Gnma Fund and Real Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gnma Fund and Real Return
The main advantage of trading using opposite Gnma Fund and Real Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gnma Fund position performs unexpectedly, Real Return 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 Real Return will offset losses from the drop in Real Return's long position.| Gnma Fund vs. Eventide Healthcare Life | Gnma Fund vs. John Hancock Var | Gnma Fund vs. Invesco Global Health | Gnma Fund vs. Allianzgi Health Sciences |
| Real Return vs. Gnma Fund Institutional | Real Return vs. Investment Grade Porate | Real Return vs. Long Term Government Fund | Real Return vs. Pimco Em Fundamental |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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