Correlation Between Applied Finance and Dunham Corporate/govern
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Dunham Corporate/govern 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 Applied Finance and Dunham Corporate/govern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Dunham Porategovernment Bond, you can compare the effects of market volatilities on Applied Finance and Dunham Corporate/govern 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 Applied Finance with a short position of Dunham Corporate/govern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Dunham Corporate/govern.
Diversification Opportunities for Applied Finance and Dunham Corporate/govern
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Dunham is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Dunham Porategovernment Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Porategovernment and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Dunham Corporate/govern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Porategovernment has no effect on the direction of Applied Finance i.e., Applied Finance and Dunham Corporate/govern go up and down completely randomly.
Pair Corralation between Applied Finance and Dunham Corporate/govern
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 3.98 times more return on investment than Dunham Corporate/govern. However, Applied Finance is 3.98 times more volatile than Dunham Porategovernment Bond. It trades about 0.13 of its potential returns per unit of risk. Dunham Porategovernment Bond is currently generating about 0.05 per unit of risk. If you would invest 2,191 in Applied Finance Explorer on October 20, 2024 and sell it today you would earn a total of 54.00 from holding Applied Finance Explorer or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Dunham Porategovernment Bond
Performance |
| Timeline |
| Applied Finance Explorer |
| Dunham Porategovernment |
Applied Finance and Dunham Corporate/govern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Dunham Corporate/govern
The main advantage of trading using opposite Applied Finance and Dunham Corporate/govern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Dunham Corporate/govern 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 Dunham Corporate/govern will offset losses from the drop in Dunham Corporate/govern's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Dunham Corporate/govern vs. Touchstone Large Cap | Dunham Corporate/govern vs. Fidelity Large Cap | Dunham Corporate/govern vs. Blackrock Large Cap | Dunham Corporate/govern vs. Tax Managed Large Cap |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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