Correlation Between Dunham High and Pace High
Can any of the company-specific risk be diversified away by investing in both Dunham High and Pace High 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 Pace High 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 Pace High Yield, you can compare the effects of market volatilities on Dunham High and Pace High 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 Pace High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and Pace High.
Diversification Opportunities for Dunham High and Pace High
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dunham and Pace is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and Pace High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace High Yield 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 Pace High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace High Yield has no effect on the direction of Dunham High i.e., Dunham High and Pace High go up and down completely randomly.
Pair Corralation between Dunham High and Pace High
Assuming the 90 days horizon Dunham High Yield is expected to generate 0.89 times more return on investment than Pace High. However, Dunham High Yield is 1.12 times less risky than Pace High. It trades about 0.39 of its potential returns per unit of risk. Pace High Yield is currently generating about 0.11 per unit of risk. If you would invest 877.00 in Dunham High Yield on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Dunham High Yield or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham High Yield vs. Pace High Yield
Performance |
| Timeline |
| Dunham High Yield |
| Pace High Yield |
Dunham High and Pace High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham High and Pace High
The main advantage of trading using opposite Dunham High and Pace High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham High position performs unexpectedly, Pace High 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 Pace High will offset losses from the drop in Pace High's long position.| Dunham High vs. Dunham Dynamic Macro | Dunham High vs. Dunham Porategovernment Bond | Dunham High vs. Dunham Small Cap | Dunham High vs. Dunham Emerging Markets |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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