Correlation Between Dunham Small and Dunham International
Can any of the company-specific risk be diversified away by investing in both Dunham Small and Dunham International 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 Small and Dunham International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Small Cap and Dunham International Opportunity, you can compare the effects of market volatilities on Dunham Small and Dunham International 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 Small with a short position of Dunham International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Small and Dunham International.
Diversification Opportunities for Dunham Small and Dunham International
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunham and Dunham is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Small Cap and Dunham International Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham International and Dunham Small 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 Small Cap are associated (or correlated) with Dunham International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham International has no effect on the direction of Dunham Small i.e., Dunham Small and Dunham International go up and down completely randomly.
Pair Corralation between Dunham Small and Dunham International
Assuming the 90 days horizon Dunham Small Cap is expected to generate 9.15 times more return on investment than Dunham International. However, Dunham Small is 9.15 times more volatile than Dunham International Opportunity. It trades about 0.29 of its potential returns per unit of risk. Dunham International Opportunity is currently generating about 0.28 per unit of risk. If you would invest 1,947 in Dunham Small Cap on September 3, 2024 and sell it today you would earn a total of 170.00 from holding Dunham Small Cap or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Small Cap vs. Dunham International Opportuni
Performance |
| Timeline |
| Dunham Small Cap |
| Dunham International |
Dunham Small and Dunham International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Small and Dunham International
The main advantage of trading using opposite Dunham Small and Dunham International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Small position performs unexpectedly, Dunham International 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 International will offset losses from the drop in Dunham International's long position.| Dunham Small vs. Jhancock Diversified Macro | Dunham Small vs. Calvert Conservative Allocation | Dunham Small vs. Harbor Diversified International | Dunham Small vs. Fidelity Advisor Diversified |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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