Correlation Between Ab High and Dunham Small
Can any of the company-specific risk be diversified away by investing in both Ab High and Dunham Small 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 High and Dunham Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab High Income and Dunham Small Cap, you can compare the effects of market volatilities on Ab High and Dunham Small 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 High with a short position of Dunham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab High and Dunham Small.
Diversification Opportunities for Ab High and Dunham Small
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AGDIX and Dunham is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ab High Income and Dunham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Small Cap and Ab High 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 High Income are associated (or correlated) with Dunham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Small Cap has no effect on the direction of Ab High i.e., Ab High and Dunham Small go up and down completely randomly.
Pair Corralation between Ab High and Dunham Small
Assuming the 90 days horizon Ab High Income is expected to generate 0.12 times more return on investment than Dunham Small. However, Ab High Income is 8.37 times less risky than Dunham Small. It trades about -0.27 of its potential returns per unit of risk. Dunham Small Cap is currently generating about -0.14 per unit of risk. If you would invest 709.00 in Ab High Income on October 10, 2024 and sell it today you would lose (6.00) from holding Ab High Income or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ab High Income vs. Dunham Small Cap
Performance |
| Timeline |
| Ab High Income |
| Dunham Small Cap |
Ab High and Dunham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab High and Dunham Small
The main advantage of trading using opposite Ab High and Dunham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab High position performs unexpectedly, Dunham Small 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 Small will offset losses from the drop in Dunham Small's long position.| Ab High vs. Financial Industries Fund | Ab High vs. Putnam Global Financials | Ab High vs. Blackstone Secured Lending | Ab High vs. John Hancock Financial |
| Dunham Small vs. Ab High Income | Dunham Small vs. Artisan High Income | Dunham Small vs. Ab High Income | Dunham Small vs. Transamerica High Yield |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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