Correlation Between Dunham Large and Fundamental Large
Can any of the company-specific risk be diversified away by investing in both Dunham Large and Fundamental 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 Large and Fundamental Large 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 Fundamental Large Cap, you can compare the effects of market volatilities on Dunham Large and Fundamental 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 Large with a short position of Fundamental Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Large and Fundamental Large.
Diversification Opportunities for Dunham Large and Fundamental Large
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dunham and Fundamental is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Large Cap and Fundamental Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Large Cap 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 Fundamental Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Large Cap has no effect on the direction of Dunham Large i.e., Dunham Large and Fundamental Large go up and down completely randomly.
Pair Corralation between Dunham Large and Fundamental Large
Assuming the 90 days horizon Dunham Large is expected to generate 1.11 times less return on investment than Fundamental Large. But when comparing it to its historical volatility, Dunham Large Cap is 1.36 times less risky than Fundamental Large. It trades about 0.05 of its potential returns per unit of risk. Fundamental Large Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,575 in Fundamental Large Cap on November 27, 2024 and sell it today you would earn a total of 1,140 from holding Fundamental Large Cap or generate 20.45% 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. Fundamental Large Cap
Performance |
| Timeline |
| Dunham Large Cap |
| Fundamental Large Cap |
Dunham Large and Fundamental Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Large and Fundamental Large
The main advantage of trading using opposite Dunham Large and Fundamental Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Large position performs unexpectedly, Fundamental 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 Fundamental Large will offset losses from the drop in Fundamental Large's long position.| Dunham Large vs. World Precious Minerals | Dunham Large vs. First Eagle Gold | Dunham Large vs. The Gold Bullion | Dunham Large vs. Fidelity Advisor Gold |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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