Correlation Between Dunham High and Income Stock
Can any of the company-specific risk be diversified away by investing in both Dunham High and Income Stock 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 Income Stock 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 Income Stock Fund, you can compare the effects of market volatilities on Dunham High and Income Stock 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 Income Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and Income Stock.
Diversification Opportunities for Dunham High and Income Stock
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunham and Income is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and Income Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Stock 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 Income Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Stock has no effect on the direction of Dunham High i.e., Dunham High and Income Stock go up and down completely randomly.
Pair Corralation between Dunham High and Income Stock
Assuming the 90 days horizon Dunham High is expected to generate 2.28 times less return on investment than Income Stock. But when comparing it to its historical volatility, Dunham High Yield is 3.45 times less risky than Income Stock. It trades about 0.19 of its potential returns per unit of risk. Income Stock Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,750 in Income Stock Fund on August 25, 2024 and sell it today you would earn a total of 430.00 from holding Income Stock Fund or generate 24.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham High Yield vs. Income Stock Fund
Performance |
| Timeline |
| Dunham High Yield |
| Income Stock |
Dunham High and Income Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham High and Income Stock
The main advantage of trading using opposite Dunham High and Income Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham High position performs unexpectedly, Income Stock 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 Income Stock will offset losses from the drop in Income Stock's long position.| Dunham High vs. Dunham Emerging Markets | Dunham High vs. Dunham Floating Rate | Dunham High vs. Dunham International Opportunity | Dunham High vs. Dunham International Stock |
| Income Stock vs. Dunham High Yield | Income Stock vs. Pioneer High Yield | Income Stock vs. Pimco High Yield | Income Stock vs. Lord Abbett High |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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