Correlation Between Ab Select and Ginnie Mae
Can any of the company-specific risk be diversified away by investing in both Ab Select 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 Ab Select and Ginnie Mae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Select Equity and Ginnie Mae Fund, you can compare the effects of market volatilities on Ab Select 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 Ab Select with a short position of Ginnie Mae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Ginnie Mae.
Diversification Opportunities for Ab Select and Ginnie Mae
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AUUIX and Ginnie is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Equity 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 Ab Select 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 Ab Select Equity 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 Ab Select i.e., Ab Select and Ginnie Mae go up and down completely randomly.
Pair Corralation between Ab Select and Ginnie Mae
Assuming the 90 days horizon Ab Select Equity is expected to generate 1.44 times more return on investment than Ginnie Mae. However, Ab Select is 1.44 times more volatile than Ginnie Mae Fund. It trades about 0.39 of its potential returns per unit of risk. Ginnie Mae Fund is currently generating about 0.03 per unit of risk. If you would invest 2,007 in Ab Select Equity on March 2, 2024 and sell it today you would earn a total of 97.00 from holding Ab Select Equity or generate 4.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Ab Select Equity vs. Ginnie Mae Fund
Performance |
Timeline |
Ab Select Equity |
Ginnie Mae Fund |
Ab Select and Ginnie Mae Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab Select and Ginnie Mae
The main advantage of trading using opposite Ab Select and Ginnie Mae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Select 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.The idea behind Ab Select Equity and Ginnie Mae Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Ginnie Mae vs. Vanguard Intermediate Term Government | Ginnie Mae vs. Us Government Securities | Ginnie Mae 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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