Correlation Between Dana Large and High Income
Can any of the company-specific risk be diversified away by investing in both Dana Large and High Income 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 High Income 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 High Income Fund, you can compare the effects of market volatilities on Dana Large and High Income 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 High Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and High Income.
Diversification Opportunities for Dana Large and High Income
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dana and High is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and High Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Income Fund 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 High Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Income Fund has no effect on the direction of Dana Large i.e., Dana Large and High Income go up and down completely randomly.
Pair Corralation between Dana Large and High Income
Assuming the 90 days horizon Dana Large Cap is expected to generate 3.54 times more return on investment than High Income. However, Dana Large is 3.54 times more volatile than High Income Fund. It trades about 0.14 of its potential returns per unit of risk. High Income Fund is currently generating about 0.2 per unit of risk. If you would invest 1,912 in Dana Large Cap on September 12, 2024 and sell it today you would earn a total of 790.00 from holding Dana Large Cap or generate 41.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Large Cap vs. High Income Fund
Performance |
| Timeline |
| Dana Large Cap |
| High Income Fund |
Dana Large and High Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana Large and High Income
The main advantage of trading using opposite Dana Large and High Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large position performs unexpectedly, High Income 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 High Income will offset losses from the drop in High Income's long position.| Dana Large vs. Intermediate Government Bond | Dana Large vs. Prudential Government Income | Dana Large vs. Us Government Securities | Dana Large vs. Virtus Seix Government |
| High Income vs. Jhancock Disciplined Value | High Income vs. Lord Abbett Affiliated | High Income vs. Dana Large Cap | High Income vs. Large Cap Growth Profund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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