Correlation Between Dunham Real and Transamerica Financial
Can any of the company-specific risk be diversified away by investing in both Dunham Real and Transamerica 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 Real and Transamerica Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Real Estate and Transamerica Financial Life, you can compare the effects of market volatilities on Dunham Real and Transamerica 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 Real with a short position of Transamerica Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Real and Transamerica Financial.
Diversification Opportunities for Dunham Real and Transamerica Financial
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dunham and Transamerica is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Real Estate and Transamerica Financial Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Financial and Dunham Real 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 Real Estate are associated (or correlated) with Transamerica Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Financial has no effect on the direction of Dunham Real i.e., Dunham Real and Transamerica Financial go up and down completely randomly.
Pair Corralation between Dunham Real and Transamerica Financial
Assuming the 90 days horizon Dunham Real Estate is expected to generate 1.48 times more return on investment than Transamerica Financial. However, Dunham Real is 1.48 times more volatile than Transamerica Financial Life. It trades about 0.09 of its potential returns per unit of risk. Transamerica Financial Life is currently generating about 0.09 per unit of risk. If you would invest 1,060 in Dunham Real Estate on September 21, 2024 and sell it today you would earn a total of 331.00 from holding Dunham Real Estate or generate 31.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Real Estate vs. Transamerica Financial Life
Performance |
| Timeline |
| Dunham Real Estate |
| Transamerica Financial |
Dunham Real and Transamerica Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Real and Transamerica Financial
The main advantage of trading using opposite Dunham Real and Transamerica Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Real position performs unexpectedly, Transamerica 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 Transamerica Financial will offset losses from the drop in Transamerica Financial's long position.| Dunham Real vs. Realty Income | Dunham Real vs. Dynex Capital | Dunham Real vs. First Industrial Realty | Dunham Real vs. Healthcare Realty Trust |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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