Correlation Between Gateway Fund and Cavanal Hill

Can any of the company-specific risk be diversified away by investing in both Gateway Fund and Cavanal Hill 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 Cavanal Hill 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 Cavanal Hill Hedged, you can compare the effects of market volatilities on Gateway Fund and Cavanal Hill 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 Cavanal Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gateway Fund and Cavanal Hill.

Diversification Opportunities for Gateway Fund and Cavanal Hill

1.0

Correlation Coefficient

Gateway Fund  Cavanal Hill

No risk reduction

The 3 months correlation between Gateway and Cavanal is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Gateway Fund Class and Cavanal Hill Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavanal Hill Hedged 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 Cavanal Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cavanal Hill Hedged has no effect on the direction of Gateway Fund i.e., Gateway Fund and Cavanal Hill go up and down completely randomly.

Pair Corralation between Gateway Fund and Cavanal Hill

Assuming the 90 days horizon Gateway Fund is expected to generate 1.83 times less return on investment than Cavanal Hill. But when comparing it to its historical volatility, Gateway Fund Class is 1.87 times less risky than Cavanal Hill. It trades about 0.36 of its potential returns per unit of risk. Cavanal Hill Hedged is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,098  in Cavanal Hill Hedged on April 29, 2025 and sell it today you would earn a total of  155.00  from holding Cavanal Hill Hedged or generate 14.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Gateway Fund Class  vs.  Cavanal Hill Hedged

Gateway Fund Class

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Gateway Fund Class are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Gateway Fund may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Cavanal Hill Hedged

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cavanal Hill Hedged are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Cavanal Hill showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gateway Fund and Cavanal Hill

The main advantage of trading using opposite Gateway Fund and Cavanal Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gateway Fund position performs unexpectedly, Cavanal Hill 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 Cavanal Hill will offset losses from the drop in Cavanal Hill's long position.

The idea behind Gateway Fund Class and Cavanal Hill Hedged 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.