Correlation Between Dunham Large and Federated Government
Can any of the company-specific risk be diversified away by investing in both Dunham Large and Federated Government 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 Large and Federated Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Large Cap and Federated Government Ultrashort, you can compare the effects of market volatilities on Dunham Large and Federated Government 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 Large with a short position of Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Large and Federated Government.
Diversification Opportunities for Dunham Large and Federated Government
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dunham and Federated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Large Cap and Federated Government Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government and Dunham Large 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 Large Cap are associated (or correlated) with Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Dunham Large i.e., Dunham Large and Federated Government go up and down completely randomly.
Pair Corralation between Dunham Large and Federated Government
Assuming the 90 days horizon Dunham Large Cap is expected to generate 18.08 times more return on investment than Federated Government. However, Dunham Large is 18.08 times more volatile than Federated Government Ultrashort. It trades about 0.37 of its potential returns per unit of risk. Federated Government Ultrashort is currently generating about 0.13 per unit of risk. If you would invest 2,024 in Dunham Large Cap on September 3, 2024 and sell it today you would earn a total of 112.00 from holding Dunham Large Cap or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Large Cap vs. Federated Government Ultrashor
Performance |
| Timeline |
| Dunham Large Cap |
| Federated Government |
Dunham Large and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Large and Federated Government
The main advantage of trading using opposite Dunham Large and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Large position performs unexpectedly, Federated Government 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 Federated Government will offset losses from the drop in Federated Government's long position.| Dunham Large vs. Ab Bond Inflation | Dunham Large vs. Tiaa Cref Inflation Linked Bond | Dunham Large vs. Western Asset Inflation | Dunham Large vs. Oklahoma College Savings |
| Federated Government vs. Dunham Large Cap | Federated Government vs. Siit Large Cap | Federated Government vs. Qs Large Cap | Federated Government vs. Qs Large Cap |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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