Correlation Between Dunham Small and Dunham Corporate/govern
Can any of the company-specific risk be diversified away by investing in both Dunham Small and Dunham Corporate/govern 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 Corporate/govern 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 Porategovernment Bond, you can compare the effects of market volatilities on Dunham Small and Dunham Corporate/govern 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 Corporate/govern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Small and Dunham Corporate/govern.
Diversification Opportunities for Dunham Small and Dunham Corporate/govern
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunham and Dunham is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Small Cap and Dunham Porategovernment Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Porategovernment 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 Corporate/govern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Porategovernment has no effect on the direction of Dunham Small i.e., Dunham Small and Dunham Corporate/govern go up and down completely randomly.
Pair Corralation between Dunham Small and Dunham Corporate/govern
Assuming the 90 days horizon Dunham Small is expected to generate 1.26 times less return on investment than Dunham Corporate/govern. In addition to that, Dunham Small is 3.96 times more volatile than Dunham Porategovernment Bond. It trades about 0.01 of its total potential returns per unit of risk. Dunham Porategovernment Bond is currently generating about 0.05 per unit of volatility. If you would invest 1,162 in Dunham Porategovernment Bond on November 1, 2024 and sell it today you would earn a total of 88.00 from holding Dunham Porategovernment Bond or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dunham Small Cap vs. Dunham Porategovernment Bond
Performance |
| Timeline |
| Dunham Small Cap |
| Dunham Porategovernment |
Dunham Small and Dunham Corporate/govern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham Small and Dunham Corporate/govern
The main advantage of trading using opposite Dunham Small and Dunham Corporate/govern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Small position performs unexpectedly, Dunham Corporate/govern 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 Corporate/govern will offset losses from the drop in Dunham Corporate/govern's long position.| Dunham Small vs. Dunham Dynamic Macro | Dunham Small vs. Dunham Appreciation Income | Dunham Small vs. Dunham Porategovernment Bond | Dunham Small 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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