Correlation Between Dunham Corporate/govern and Aqr Large
Can any of the company-specific risk be diversified away by investing in both Dunham Corporate/govern and Aqr Large 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 Corporate/govern and Aqr Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Porategovernment Bond and Aqr Large Cap, you can compare the effects of market volatilities on Dunham Corporate/govern and Aqr Large 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 Corporate/govern with a short position of Aqr Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Corporate/govern and Aqr Large.
Diversification Opportunities for Dunham Corporate/govern and Aqr Large
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunham and Aqr is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Aqr Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Large Cap and Dunham Corporate/govern 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 Porategovernment Bond are associated (or correlated) with Aqr Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Large Cap has no effect on the direction of Dunham Corporate/govern i.e., Dunham Corporate/govern and Aqr Large go up and down completely randomly.
Pair Corralation between Dunham Corporate/govern and Aqr Large
Assuming the 90 days horizon Dunham Corporate/govern is expected to generate 7.8 times less return on investment than Aqr Large. But when comparing it to its historical volatility, Dunham Porategovernment Bond is 5.1 times less risky than Aqr Large. It trades about 0.15 of its potential returns per unit of risk. Aqr Large Cap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,174 in Aqr Large Cap on November 2, 2024 and sell it today you would earn a total of 117.00 from holding Aqr Large Cap or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Dunham Porategovernment Bond vs. Aqr Large Cap
Performance |
| Timeline |
| Dunham Porategovernment |
| Aqr Large Cap |
Dunham Corporate/govern and Aqr Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Corporate/govern and Aqr Large
The main advantage of trading using opposite Dunham Corporate/govern and Aqr Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Corporate/govern position performs unexpectedly, Aqr Large 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 Aqr Large will offset losses from the drop in Aqr Large's long position.| Dunham Corporate/govern vs. Sp Smallcap 600 | Dunham Corporate/govern vs. Astoncrosswind Small Cap | Dunham Corporate/govern vs. Small Pany Growth | Dunham Corporate/govern vs. Praxis Small Cap |
| Aqr Large vs. Ab Global Bond | Aqr Large vs. Ambrus Core Bond | Aqr Large vs. Multisector Bond Sma | Aqr Large vs. California Municipal Portfolio |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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