Correlation Between Gateway Fund and Arbitrage Fund
Can any of the company-specific risk be diversified away by investing in both Gateway Fund and Arbitrage 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 Gateway Fund and Arbitrage Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gateway Fund Class and The Arbitrage Fund, you can compare the effects of market volatilities on Gateway Fund and Arbitrage 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 Gateway Fund with a short position of Arbitrage Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gateway Fund and Arbitrage Fund.
Diversification Opportunities for Gateway Fund and Arbitrage Fund
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gateway and Arbitrage is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gateway Fund Class and The Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Fund and Gateway 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 Gateway Fund Class are associated (or correlated) with Arbitrage Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Fund has no effect on the direction of Gateway Fund i.e., Gateway Fund and Arbitrage Fund go up and down completely randomly.
Pair Corralation between Gateway Fund and Arbitrage Fund
Assuming the 90 days horizon Gateway Fund Class is expected to generate 1.79 times more return on investment than Arbitrage Fund. However, Gateway Fund is 1.79 times more volatile than The Arbitrage Fund. It trades about 0.1 of its potential returns per unit of risk. The Arbitrage Fund is currently generating about -0.08 per unit of risk. If you would invest 4,529 in Gateway Fund Class on September 24, 2024 and sell it today you would earn a total of 136.00 from holding Gateway Fund Class or generate 3.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gateway Fund Class vs. The Arbitrage Fund
Performance |
Timeline |
Gateway Fund Class |
Arbitrage Fund |
Gateway Fund and Arbitrage Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gateway Fund and Arbitrage Fund
The main advantage of trading using opposite Gateway Fund and Arbitrage Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gateway Fund position performs unexpectedly, Arbitrage 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 Arbitrage Fund will offset losses from the drop in Arbitrage Fund's long position.Gateway Fund vs. Putnam Money Market | Gateway Fund vs. Hewitt Money Market | Gateway Fund vs. General Money Market | Gateway Fund vs. Prudential Government Money |
Arbitrage Fund vs. The Arbitrage Fund | Arbitrage Fund vs. The Arbitrage Fund | Arbitrage Fund vs. The Arbitrage Credit | Arbitrage Fund vs. The Arbitrage Fund |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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