Correlation Between Dunham High and Western Asset
Can any of the company-specific risk be diversified away by investing in both Dunham High and Western Asset 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 Western Asset 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 Western Asset Diversified, you can compare the effects of market volatilities on Dunham High and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and Western Asset.
Diversification Opportunities for Dunham High and Western Asset
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dunham and Western is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Dunham High i.e., Dunham High and Western Asset go up and down completely randomly.
Pair Corralation between Dunham High and Western Asset
Assuming the 90 days horizon Dunham High Yield is expected to generate 0.55 times more return on investment than Western Asset. However, Dunham High Yield is 1.83 times less risky than Western Asset. It trades about 0.22 of its potential returns per unit of risk. Western Asset Diversified is currently generating about 0.07 per unit of risk. If you would invest 868.00 in Dunham High Yield on September 3, 2024 and sell it today you would earn a total of 6.00 from holding Dunham High Yield or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham High Yield vs. Western Asset Diversified
Performance |
| Timeline |
| Dunham High Yield |
| Western Asset Diversified |
Dunham High and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham High and Western Asset
The main advantage of trading using opposite Dunham High and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham High position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Dunham High vs. Western Asset Diversified | Dunham High vs. Harbor Diversified International | Dunham High vs. Massmutual Premier Diversified | Dunham High vs. Adams Diversified Equity |
| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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