Correlation Between Dunham Real and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Dunham Real and Sterling Capital 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 Sterling Capital 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 Sterling Capital Stratton, you can compare the effects of market volatilities on Dunham Real and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Real and Sterling Capital.
Diversification Opportunities for Dunham Real and Sterling Capital
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunham and STERLING is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Real Estate and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Stratton has no effect on the direction of Dunham Real i.e., Dunham Real and Sterling Capital go up and down completely randomly.
Pair Corralation between Dunham Real and Sterling Capital
Assuming the 90 days horizon Dunham Real Estate is expected to generate 1.1 times more return on investment than Sterling Capital. However, Dunham Real is 1.1 times more volatile than Sterling Capital Stratton. It trades about 0.04 of its potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.04 per unit of risk. If you would invest 1,246 in Dunham Real Estate on August 29, 2024 and sell it today you would earn a total of 287.00 from holding Dunham Real Estate or generate 23.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Real Estate vs. Sterling Capital Stratton
Performance |
| Timeline |
| Dunham Real Estate |
| Sterling Capital Stratton |
Dunham Real and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Real and Sterling Capital
The main advantage of trading using opposite Dunham Real and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Real position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Dunham Real vs. Franklin Natural Resources | Dunham Real vs. HUMANA INC | Dunham Real vs. Aquagold International | Dunham Real vs. Barloworld Ltd ADR |
| Sterling Capital vs. Franklin Natural Resources | Sterling Capital vs. HUMANA INC | Sterling Capital vs. Aquagold International | Sterling Capital vs. Barloworld Ltd ADR |
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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