Correlation Between Dunham High and Pax Large
Can any of the company-specific risk be diversified away by investing in both Dunham High and Pax Large 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 Pax Large 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 Pax Large Cap, you can compare the effects of market volatilities on Dunham High and Pax Large 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 Pax Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and Pax Large.
Diversification Opportunities for Dunham High and Pax Large
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunham and Pax is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and Pax Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Large Cap 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 Pax Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Large Cap has no effect on the direction of Dunham High i.e., Dunham High and Pax Large go up and down completely randomly.
Pair Corralation between Dunham High and Pax Large
Assuming the 90 days horizon Dunham High is expected to generate 4.39 times less return on investment than Pax Large. But when comparing it to its historical volatility, Dunham High Yield is 4.53 times less risky than Pax Large. It trades about 0.29 of its potential returns per unit of risk. Pax Large Cap is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,491 in Pax Large Cap on September 1, 2024 and sell it today you would earn a total of 63.00 from holding Pax Large Cap or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dunham High Yield vs. Pax Large Cap
Performance |
| Timeline |
| Dunham High Yield |
| Pax Large Cap |
Dunham High and Pax Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham High and Pax Large
The main advantage of trading using opposite Dunham High and Pax Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham High position performs unexpectedly, Pax Large 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 Pax Large will offset losses from the drop in Pax Large'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 |
| Pax Large vs. Dunham High Yield | Pax Large vs. Virtus High Yield | Pax Large vs. Gmo High Yield | Pax Large vs. Alpine 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |