Correlation Between Dunham Corporate/govern and Short Duration
Can any of the company-specific risk be diversified away by investing in both Dunham Corporate/govern and Short Duration 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 Short Duration 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 Short Duration Bond, you can compare the effects of market volatilities on Dunham Corporate/govern and Short Duration 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 Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Corporate/govern and Short Duration.
Diversification Opportunities for Dunham Corporate/govern and Short Duration
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dunham and Short is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Short Duration Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Bond 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 Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Bond has no effect on the direction of Dunham Corporate/govern i.e., Dunham Corporate/govern and Short Duration go up and down completely randomly.
Pair Corralation between Dunham Corporate/govern and Short Duration
Assuming the 90 days horizon Dunham Porategovernment Bond is expected to generate 2.7 times more return on investment than Short Duration. However, Dunham Corporate/govern is 2.7 times more volatile than Short Duration Bond. It trades about 0.11 of its potential returns per unit of risk. Short Duration Bond is currently generating about 0.21 per unit of risk. If you would invest 1,255 in Dunham Porategovernment Bond on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Dunham Porategovernment Bond or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Porategovernment Bond vs. Short Duration Bond
Performance |
| Timeline |
| Dunham Porategovernment |
| Short Duration Bond |
Dunham Corporate/govern and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Corporate/govern and Short Duration
The main advantage of trading using opposite Dunham Corporate/govern and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Corporate/govern position performs unexpectedly, Short Duration 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 Short Duration will offset losses from the drop in Short Duration's long position.The idea behind Dunham Porategovernment Bond and Short Duration Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Short Duration vs. International Developed Markets | Short Duration vs. Global Real Estate | Short Duration vs. Global Real Estate | Short Duration vs. Global Real Estate |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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