Correlation Between Dunham High and Small Cap
Can any of the company-specific risk be diversified away by investing in both Dunham High and Small Cap 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 High and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham High Yield and Small Cap Growth, you can compare the effects of market volatilities on Dunham High and Small Cap 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 High with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and Small Cap.
Diversification Opportunities for Dunham High and Small Cap
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunham and SMALL is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Dunham High 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 High Yield are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Dunham High i.e., Dunham High and Small Cap go up and down completely randomly.
Pair Corralation between Dunham High and Small Cap
Assuming the 90 days horizon Dunham High is expected to generate 3.6 times less return on investment than Small Cap. But when comparing it to its historical volatility, Dunham High Yield is 5.59 times less risky than Small Cap. It trades about 0.41 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,910 in Small Cap Growth on October 25, 2024 and sell it today you would earn a total of 96.00 from holding Small Cap Growth or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham High Yield vs. Small Cap Growth
Performance |
| Timeline |
| Dunham High Yield |
| Small Cap Growth |
Dunham High and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham High and Small Cap
The main advantage of trading using opposite Dunham High and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham High position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Dunham High vs. Franklin Moderate Allocation | Dunham High vs. Upright Assets Allocation | Dunham High vs. Growth Allocation Fund | Dunham High vs. Guidemark Large Cap |
| Small Cap vs. Putnam International Capital | Small Cap vs. Putnam Small Cap | Small Cap vs. Putnam Equity Income | Small Cap vs. Putnam Growth Opportunities |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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