Correlation Between Buffalo High and Dunham High
Can any of the company-specific risk be diversified away by investing in both Buffalo High and Dunham High 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 Buffalo High and Dunham High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buffalo High Yield and Dunham High Yield, you can compare the effects of market volatilities on Buffalo High and Dunham High 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 Buffalo High with a short position of Dunham High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo High and Dunham High.
Diversification Opportunities for Buffalo High and Dunham High
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Buffalo and Dunham is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo High Yield and Dunham High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham High Yield and Buffalo 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 Buffalo High Yield are associated (or correlated) with Dunham High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham High Yield has no effect on the direction of Buffalo High i.e., Buffalo High and Dunham High go up and down completely randomly.
Pair Corralation between Buffalo High and Dunham High
Assuming the 90 days horizon Buffalo High is expected to generate 1.59 times less return on investment than Dunham High. But when comparing it to its historical volatility, Buffalo High Yield is 1.67 times less risky than Dunham High. It trades about 0.38 of its potential returns per unit of risk. Dunham High Yield is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 864.00 in Dunham High Yield on November 3, 2024 and sell it today you would earn a total of 11.00 from holding Dunham High Yield or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Buffalo High Yield vs. Dunham High Yield
Performance |
| Timeline |
| Buffalo High Yield |
| Dunham High Yield |
Buffalo High and Dunham High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buffalo High and Dunham High
The main advantage of trading using opposite Buffalo High and Dunham High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo High position performs unexpectedly, Dunham High 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 High will offset losses from the drop in Dunham High's long position.| Buffalo High vs. Buffalo Flexible Income | Buffalo High vs. Buffalo Growth Fund | Buffalo High vs. Buffalo Large Cap | Buffalo High vs. Buffalo Mid Cap |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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