Correlation Between Dana Large and M Large
Can any of the company-specific risk be diversified away by investing in both Dana Large and M 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 Dana Large and M Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Large Cap and M Large Cap, you can compare the effects of market volatilities on Dana Large and M 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 Dana Large with a short position of M Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and M Large.
Diversification Opportunities for Dana Large and M Large
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dana and MTCGX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large Cap and Dana 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 Dana Large Cap are associated (or correlated) with M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Dana Large i.e., Dana Large and M Large go up and down completely randomly.
Pair Corralation between Dana Large and M Large
Assuming the 90 days horizon Dana Large Cap is expected to under-perform the M Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dana Large Cap is 1.66 times less risky than M Large. The mutual fund trades about -0.05 of its potential returns per unit of risk. The M Large Cap is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,334 in M Large Cap on November 27, 2024 and sell it today you would lose (7.00) from holding M Large Cap or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Large Cap vs. M Large Cap
Performance |
| Timeline |
| Dana Large Cap |
| M Large Cap |
Dana Large and M Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana Large and M Large
The main advantage of trading using opposite Dana Large and M Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large position performs unexpectedly, M 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 M Large will offset losses from the drop in M Large's long position.| Dana Large vs. Doubleline Emerging Markets | Dana Large vs. Multisector Bond Sma | Dana Large vs. Barings Active Short | Dana Large vs. Artisan High Income |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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