Correlation Between Dunham Corporate/govern and Federated Government
Can any of the company-specific risk be diversified away by investing in both Dunham Corporate/govern and Federated Government 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 Federated Government 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 Federated Government Ultrashort, you can compare the effects of market volatilities on Dunham Corporate/govern and Federated Government 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 Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Corporate/govern and Federated Government.
Diversification Opportunities for Dunham Corporate/govern and Federated Government
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dunham and Federated is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Federated Government Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government 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 Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Dunham Corporate/govern i.e., Dunham Corporate/govern and Federated Government go up and down completely randomly.
Pair Corralation between Dunham Corporate/govern and Federated Government
Assuming the 90 days horizon Dunham Corporate/govern is expected to generate 1.39 times less return on investment than Federated Government. In addition to that, Dunham Corporate/govern is 3.11 times more volatile than Federated Government Ultrashort. It trades about 0.04 of its total potential returns per unit of risk. Federated Government Ultrashort is currently generating about 0.19 per unit of volatility. If you would invest 889.00 in Federated Government Ultrashort on November 27, 2024 and sell it today you would earn a total of 88.00 from holding Federated Government Ultrashort or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Porategovernment Bond vs. Federated Government Ultrashor
Performance |
| Timeline |
| Dunham Porategovernment |
| Federated Government |
Dunham Corporate/govern and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Corporate/govern and Federated Government
The main advantage of trading using opposite Dunham Corporate/govern and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Corporate/govern position performs unexpectedly, Federated Government 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 Federated Government will offset losses from the drop in Federated Government's long position.| Dunham Corporate/govern vs. Dunham Appreciation Income | Dunham Corporate/govern vs. Dunham Dynamic Macro | Dunham Corporate/govern vs. Dunham Small Cap | Dunham Corporate/govern vs. Dunham Emerging Markets |
| Federated Government vs. Jpmorgan Large Cap | Federated Government vs. M Large Cap | Federated Government vs. Tiaa Cref Large Cap Growth | Federated Government vs. Vest 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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