Correlation Between Dunham Porategovernment and Edge Midcap
Can any of the company-specific risk be diversified away by investing in both Dunham Porategovernment and Edge Midcap 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 Porategovernment and Edge Midcap 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 Edge Midcap Fund, you can compare the effects of market volatilities on Dunham Porategovernment and Edge Midcap 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 Porategovernment with a short position of Edge Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Porategovernment and Edge Midcap.
Diversification Opportunities for Dunham Porategovernment and Edge Midcap
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dunham and Edge is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Edge Midcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edge Midcap Fund and Dunham Porategovernment 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 Edge Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edge Midcap Fund has no effect on the direction of Dunham Porategovernment i.e., Dunham Porategovernment and Edge Midcap go up and down completely randomly.
Pair Corralation between Dunham Porategovernment and Edge Midcap
Assuming the 90 days horizon Dunham Porategovernment Bond is expected to generate 0.36 times more return on investment than Edge Midcap. However, Dunham Porategovernment Bond is 2.8 times less risky than Edge Midcap. It trades about 0.11 of its potential returns per unit of risk. Edge Midcap Fund is currently generating about 0.02 per unit of risk. If you would invest 1,258 in Dunham Porategovernment Bond on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Dunham Porategovernment Bond or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Porategovernment Bond vs. Edge Midcap Fund
Performance |
| Timeline |
| Dunham Porategovernment |
| Edge Midcap Fund |
Dunham Porategovernment and Edge Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Porategovernment and Edge Midcap
The main advantage of trading using opposite Dunham Porategovernment and Edge Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Porategovernment position performs unexpectedly, Edge Midcap 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 Edge Midcap will offset losses from the drop in Edge Midcap's long position.| Dunham Porategovernment vs. Metropolitan West Total | Dunham Porategovernment vs. SCOR PK | Dunham Porategovernment vs. Morningstar Unconstrained Allocation | Dunham Porategovernment vs. Thrivent High Yield |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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