Correlation Between Ginnie Mae and Us Government
Can any of the company-specific risk be diversified away by investing in both Ginnie Mae and Us Government 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 Us Government 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 Us Government Securities, you can compare the effects of market volatilities on Ginnie Mae and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ginnie Mae and Us Government.
Diversification Opportunities for Ginnie Mae and Us Government
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ginnie and RGVFX is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ginnie Mae Fund and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Ginnie Mae i.e., Ginnie Mae and Us Government go up and down completely randomly.
Pair Corralation between Ginnie Mae and Us Government
Assuming the 90 days horizon Ginnie Mae Fund is expected to under-perform the Us Government. In addition to that, Ginnie Mae is 1.06 times more volatile than Us Government Securities. It trades about -0.23 of its total potential returns per unit of risk. Us Government Securities is currently generating about -0.22 per unit of volatility. If you would invest 1,187 in Us Government Securities on January 26, 2024 and sell it today you would lose (25.00) from holding Us Government Securities or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ginnie Mae Fund vs. Us Government Securities
Performance |
| Timeline |
| Ginnie Mae Fund |
| Us Government Securities |
Ginnie Mae and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ginnie Mae and Us Government
The main advantage of trading using opposite Ginnie Mae and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ginnie Mae position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Ginnie Mae vs. Gabelli Global Financial | Ginnie Mae vs. John Hancock Financial | Ginnie Mae vs. Transamerica Financial Life | Ginnie Mae vs. 1919 Financial Services |
| Us Government vs. Eagle Small Cap | Us Government vs. Lebenthal Lisanti Small | Us Government vs. Rbb Fund | Us Government vs. United Kingdom Small |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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