Correlation Between Dunham Porategovernment and Touchstone Arbitrage
Can any of the company-specific risk be diversified away by investing in both Dunham Porategovernment and Touchstone Arbitrage 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 Touchstone Arbitrage 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 Touchstone Arbitrage Fund, you can compare the effects of market volatilities on Dunham Porategovernment and Touchstone Arbitrage 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 Touchstone Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Porategovernment and Touchstone Arbitrage.
Diversification Opportunities for Dunham Porategovernment and Touchstone Arbitrage
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dunham and Touchstone is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Touchstone Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Arbitrage 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 Touchstone Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Arbitrage has no effect on the direction of Dunham Porategovernment i.e., Dunham Porategovernment and Touchstone Arbitrage go up and down completely randomly.
Pair Corralation between Dunham Porategovernment and Touchstone Arbitrage
Assuming the 90 days horizon Dunham Porategovernment is expected to generate 2.0 times less return on investment than Touchstone Arbitrage. In addition to that, Dunham Porategovernment is 1.79 times more volatile than Touchstone Arbitrage Fund. It trades about 0.11 of its total potential returns per unit of risk. Touchstone Arbitrage Fund is currently generating about 0.38 per unit of volatility. If you would invest 933.00 in Touchstone Arbitrage Fund on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Touchstone Arbitrage Fund or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dunham Porategovernment Bond vs. Touchstone Arbitrage Fund
Performance |
| Timeline |
| Dunham Porategovernment |
| Touchstone Arbitrage |
Dunham Porategovernment and Touchstone Arbitrage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Porategovernment and Touchstone Arbitrage
The main advantage of trading using opposite Dunham Porategovernment and Touchstone Arbitrage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Porategovernment position performs unexpectedly, Touchstone Arbitrage 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 Touchstone Arbitrage will offset losses from the drop in Touchstone Arbitrage'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 |
| Touchstone Arbitrage vs. The National Tax Free | Touchstone Arbitrage vs. Ishares Municipal Bond | Touchstone Arbitrage vs. Multisector Bond Sma | Touchstone Arbitrage vs. Franklin High Yield |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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