Correlation Between Dunham Large and Aqr Sustainable
Can any of the company-specific risk be diversified away by investing in both Dunham Large and Aqr Sustainable 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 Large and Aqr Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham Large Cap and Aqr Sustainable Long Short, you can compare the effects of market volatilities on Dunham Large and Aqr Sustainable 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 Large with a short position of Aqr Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Large and Aqr Sustainable.
Diversification Opportunities for Dunham Large and Aqr Sustainable
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dunham and Aqr is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Large Cap and Aqr Sustainable Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Sustainable Long and Dunham 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 Dunham Large Cap are associated (or correlated) with Aqr Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Sustainable Long has no effect on the direction of Dunham Large i.e., Dunham Large and Aqr Sustainable go up and down completely randomly.
Pair Corralation between Dunham Large and Aqr Sustainable
Assuming the 90 days horizon Dunham Large Cap is expected to generate 0.94 times more return on investment than Aqr Sustainable. However, Dunham Large Cap is 1.07 times less risky than Aqr Sustainable. It trades about 0.15 of its potential returns per unit of risk. Aqr Sustainable Long Short is currently generating about 0.11 per unit of risk. If you would invest 1,876 in Dunham Large Cap on September 3, 2024 and sell it today you would earn a total of 277.00 from holding Dunham Large Cap or generate 14.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham Large Cap vs. Aqr Sustainable Long Short
Performance |
| Timeline |
| Dunham Large Cap |
| Aqr Sustainable Long |
Dunham Large and Aqr Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Large and Aqr Sustainable
The main advantage of trading using opposite Dunham Large and Aqr Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Large position performs unexpectedly, Aqr Sustainable 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 Aqr Sustainable will offset losses from the drop in Aqr Sustainable's long position.| Dunham Large vs. Victory High Income | Dunham Large vs. Lind Capital Partners | Dunham Large vs. Intermediate Term Tax Free Bond | Dunham Large vs. Ishares Municipal Bond |
| Aqr Sustainable vs. Franklin Natural Resources | Aqr Sustainable vs. Oil Gas Ultrasector | Aqr Sustainable vs. Firsthand Alternative Energy | Aqr Sustainable vs. Icon Natural Resources |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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