Correlation Between Dunham Real and Westwood Quality

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Can any of the company-specific risk be diversified away by investing in both Dunham Real and Westwood Quality 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 Westwood Quality 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 Westwood Quality Smallcap, you can compare the effects of market volatilities on Dunham Real and Westwood Quality 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 Westwood Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Real and Westwood Quality.

Diversification Opportunities for Dunham Real and Westwood Quality

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Dunham and Westwood is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Real Estate and Westwood Quality Smallcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Quality Smallcap 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 Westwood Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Quality Smallcap has no effect on the direction of Dunham Real i.e., Dunham Real and Westwood Quality go up and down completely randomly.

Pair Corralation between Dunham Real and Westwood Quality

Assuming the 90 days horizon Dunham Real Estate is expected to generate 0.88 times more return on investment than Westwood Quality. However, Dunham Real Estate is 1.13 times less risky than Westwood Quality. It trades about 0.08 of its potential returns per unit of risk. Westwood Quality Smallcap is currently generating about 0.06 per unit of risk. If you would invest  1,259  in Dunham Real Estate on September 4, 2024 and sell it today you would earn a total of  263.00  from holding Dunham Real Estate or generate 20.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Dunham Real Estate  vs.  Westwood Quality Smallcap

 Performance 
       Timeline  
Dunham Real Estate 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Real Estate are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dunham Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Westwood Quality Smallcap 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Westwood Quality Smallcap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Westwood Quality may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dunham Real and Westwood Quality Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dunham Real and Westwood Quality

The main advantage of trading using opposite Dunham Real and Westwood Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Real position performs unexpectedly, Westwood Quality 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 Westwood Quality will offset losses from the drop in Westwood Quality's long position.
The idea behind Dunham Real Estate and Westwood Quality Smallcap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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