Correlation Between Dunham Floating and Government Securities
Can any of the company-specific risk be diversified away by investing in both Dunham Floating and Government Securities 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 Floating and Government Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Floating Rate and Government Securities Fund, you can compare the effects of market volatilities on Dunham Floating and Government Securities 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 Floating with a short position of Government Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Floating and Government Securities.
Diversification Opportunities for Dunham Floating and Government Securities
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dunham and Government is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Floating Rate and Government Securities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Securities and Dunham Floating 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 Floating Rate are associated (or correlated) with Government Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Securities has no effect on the direction of Dunham Floating i.e., Dunham Floating and Government Securities go up and down completely randomly.
Pair Corralation between Dunham Floating and Government Securities
Assuming the 90 days horizon Dunham Floating Rate is expected to generate 0.28 times more return on investment than Government Securities. However, Dunham Floating Rate is 3.52 times less risky than Government Securities. It trades about 0.41 of its potential returns per unit of risk. Government Securities Fund is currently generating about 0.03 per unit of risk. If you would invest 749.00 in Dunham Floating Rate on August 29, 2024 and sell it today you would earn a total of 123.00 from holding Dunham Floating Rate or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Floating Rate vs. Government Securities Fund
Performance |
| Timeline |
| Dunham Floating Rate |
| Government Securities |
Dunham Floating and Government Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Floating and Government Securities
The main advantage of trading using opposite Dunham Floating and Government Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Floating position performs unexpectedly, Government Securities 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 Government Securities will offset losses from the drop in Government Securities' long position.| Dunham Floating vs. Dunham Dynamic Macro | Dunham Floating vs. Dunham Appreciation Income | Dunham Floating vs. Dunham Porategovernment Bond | Dunham Floating vs. Dunham Small Cap |
| Government Securities vs. Ultra Short Fixed Income | Government Securities vs. Siit Ultra Short | Government Securities vs. Ab Select Longshort | Government Securities vs. Calvert Short Duration |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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