Correlation Between Dunham High and First American
Can any of the company-specific risk be diversified away by investing in both Dunham High and First American 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 High and First American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham High Yield and First American Funds, you can compare the effects of market volatilities on Dunham High and First American 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 High with a short position of First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and First American.
Diversification Opportunities for Dunham High and First American
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dunham and First is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and First American Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Funds and Dunham High 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 High Yield are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Funds has no effect on the direction of Dunham High i.e., Dunham High and First American go up and down completely randomly.
Pair Corralation between Dunham High and First American
If you would invest 878.00 in Dunham High Yield on August 31, 2024 and sell it today you would earn a total of 9.00 from holding Dunham High Yield or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham High Yield vs. First American Funds
Performance |
| Timeline |
| Dunham High Yield |
| First American Funds |
Dunham High and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham High and First American
The main advantage of trading using opposite Dunham High and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham High position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.| Dunham High vs. Vanguard High Yield Corporate | Dunham High vs. Vanguard High Yield Porate | Dunham High vs. Blackrock Hi Yld | Dunham High vs. Blackrock High Yield |
| First American vs. Ab Bond Inflation | First American vs. Blackrock Inflation Protected | First American vs. Asg Managed Futures | First American vs. Western Asset Inflation |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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