Correlation Between Dunham Dynamic and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Dunham Dynamic and Ishares Municipal 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 Dunham Dynamic and Ishares Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Dynamic Macro and Ishares Municipal Bond, you can compare the effects of market volatilities on Dunham Dynamic and Ishares Municipal 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 Dunham Dynamic with a short position of Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Dynamic and Ishares Municipal.
Diversification Opportunities for Dunham Dynamic and Ishares Municipal
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dunham and Ishares is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Dynamic Macro and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond and Dunham Dynamic 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 Dunham Dynamic Macro are associated (or correlated) with Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Dunham Dynamic i.e., Dunham Dynamic and Ishares Municipal go up and down completely randomly.
Pair Corralation between Dunham Dynamic and Ishares Municipal
Assuming the 90 days horizon Dunham Dynamic is expected to generate 1.11 times less return on investment than Ishares Municipal. In addition to that, Dunham Dynamic is 1.51 times more volatile than Ishares Municipal Bond. It trades about 0.29 of its total potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.48 per unit of volatility. If you would invest 1,105 in Ishares Municipal Bond on September 13, 2024 and sell it today you would earn a total of 13.00 from holding Ishares Municipal Bond or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Dynamic Macro vs. Ishares Municipal Bond
Performance |
| Timeline |
| Dunham Dynamic Macro |
| Ishares Municipal Bond |
Dunham Dynamic and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Dynamic and Ishares Municipal
The main advantage of trading using opposite Dunham Dynamic and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Dynamic position performs unexpectedly, Ishares Municipal 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.| Dunham Dynamic vs. Invesco Global Health | Dunham Dynamic vs. Fidelity Advisor Health | Dunham Dynamic vs. Eventide Healthcare Life | Dunham Dynamic vs. Tekla Healthcare Opportunities |
| Ishares Municipal vs. Calamos Dynamic Convertible | Ishares Municipal vs. Allianzgi Convertible Income | Ishares Municipal vs. Fidelity Sai Convertible | Ishares Municipal vs. Absolute Convertible Arbitrage |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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