Correlation Between Us Government and Gnma Fund
Can any of the company-specific risk be diversified away by investing in both Us Government and Gnma 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 Us Government and Gnma Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Gnma Fund A, you can compare the effects of market volatilities on Us Government and Gnma 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 Us Government with a short position of Gnma Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Gnma Fund.
Diversification Opportunities for Us Government and Gnma Fund
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between UGSFX and Gnma is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Gnma Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gnma Fund A and Us Government 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 Us Government Securities are associated (or correlated) with Gnma Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gnma Fund A has no effect on the direction of Us Government i.e., Us Government and Gnma Fund go up and down completely randomly.
Pair Corralation between Us Government and Gnma Fund
Assuming the 90 days horizon Us Government is expected to generate 2.1 times less return on investment than Gnma Fund. But when comparing it to its historical volatility, Us Government Securities is 1.0 times less risky than Gnma Fund. It trades about 0.08 of its potential returns per unit of risk. Gnma Fund A is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 927.00 in Gnma Fund A on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Gnma Fund A or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. Gnma Fund A
Performance |
| Timeline |
| Us Government Securities |
| Gnma Fund A |
Us Government and Gnma Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Gnma Fund
The main advantage of trading using opposite Us Government and Gnma Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government position performs unexpectedly, Gnma 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 Gnma Fund will offset losses from the drop in Gnma Fund's long position.| Us Government vs. Bond Fund Of | Us Government vs. Intermediate Bond Fund | Us Government vs. Capital World Bond | Us Government vs. American Mutual Fund |
| Gnma Fund vs. Vanguard Intermediate Term Government | Gnma Fund vs. Us Government Securities | Gnma Fund vs. Us Government Securities | Gnma Fund vs. Us Government Securities |
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 CEOs Directory module to screen CEOs from public companies around the world.
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