Correlation Between Dunham Corporate/govern and Dunham Emerging
Can any of the company-specific risk be diversified away by investing in both Dunham Corporate/govern and Dunham Emerging 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 Corporate/govern and Dunham Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Porategovernment Bond and Dunham Emerging Markets, you can compare the effects of market volatilities on Dunham Corporate/govern and Dunham Emerging 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 Corporate/govern with a short position of Dunham Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Corporate/govern and Dunham Emerging.
Diversification Opportunities for Dunham Corporate/govern and Dunham Emerging
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dunham and Dunham is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Dunham Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Emerging Markets and Dunham Corporate/govern 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 Porategovernment Bond are associated (or correlated) with Dunham Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Emerging Markets has no effect on the direction of Dunham Corporate/govern i.e., Dunham Corporate/govern and Dunham Emerging go up and down completely randomly.
Pair Corralation between Dunham Corporate/govern and Dunham Emerging
Assuming the 90 days horizon Dunham Porategovernment Bond is expected to generate 0.27 times more return on investment than Dunham Emerging. However, Dunham Porategovernment Bond is 3.73 times less risky than Dunham Emerging. It trades about -0.03 of its potential returns per unit of risk. Dunham Emerging Markets is currently generating about -0.03 per unit of risk. If you would invest 1,271 in Dunham Porategovernment Bond on August 28, 2024 and sell it today you would lose (7.00) from holding Dunham Porategovernment Bond or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Porategovernment Bond vs. Dunham Emerging Markets
Performance |
| Timeline |
| Dunham Porategovernment |
| Dunham Emerging Markets |
Dunham Corporate/govern and Dunham Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Corporate/govern and Dunham Emerging
The main advantage of trading using opposite Dunham Corporate/govern and Dunham Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Corporate/govern position performs unexpectedly, Dunham Emerging 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 Dunham Emerging will offset losses from the drop in Dunham Emerging's long position.The idea behind Dunham Porategovernment Bond and Dunham Emerging Markets 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.
| Dunham Emerging vs. Dunham Dynamic Macro | Dunham Emerging vs. Dunham Appreciation Income | Dunham Emerging vs. Dunham Porategovernment Bond | Dunham Emerging vs. Dunham Small Cap |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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