Correlation Between Dunham High and 1919 Financial
Can any of the company-specific risk be diversified away by investing in both Dunham High and 1919 Financial 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 1919 Financial 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 1919 Financial Services, you can compare the effects of market volatilities on Dunham High and 1919 Financial 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 1919 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and 1919 Financial.
Diversification Opportunities for Dunham High and 1919 Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunham and 1919 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and 1919 Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1919 Financial Services 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 1919 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1919 Financial Services has no effect on the direction of Dunham High i.e., Dunham High and 1919 Financial go up and down completely randomly.
Pair Corralation between Dunham High and 1919 Financial
Assuming the 90 days horizon Dunham High is expected to generate 11.24 times less return on investment than 1919 Financial. But when comparing it to its historical volatility, Dunham High Yield is 10.94 times less risky than 1919 Financial. It trades about 0.25 of its potential returns per unit of risk. 1919 Financial Services is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,735 in 1919 Financial Services on September 5, 2024 and sell it today you would earn a total of 260.00 from holding 1919 Financial Services or generate 9.51% 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. 1919 Financial Services
Performance |
| Timeline |
| Dunham High Yield |
| 1919 Financial Services |
Dunham High and 1919 Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham High and 1919 Financial
The main advantage of trading using opposite Dunham High and 1919 Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham High position performs unexpectedly, 1919 Financial 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 1919 Financial will offset losses from the drop in 1919 Financial's long position.| Dunham High vs. Sei Daily Income | Dunham High vs. Balanced Fund Investor | Dunham High vs. Ab Value Fund | Dunham High vs. Arrow Managed Futures |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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