Correlation Between GM and Dunham Large
Can any of the company-specific risk be diversified away by investing in both GM and Dunham Large 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 GM and Dunham Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Dunham Large Cap, you can compare the effects of market volatilities on GM and Dunham Large 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 GM with a short position of Dunham Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Dunham Large.
Diversification Opportunities for GM and Dunham Large
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Dunham is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Dunham Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Large Cap and GM 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 General Motors are associated (or correlated) with Dunham Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Large Cap has no effect on the direction of GM i.e., GM and Dunham Large go up and down completely randomly.
Pair Corralation between GM and Dunham Large
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.37 times more return on investment than Dunham Large. However, GM is 3.37 times more volatile than Dunham Large Cap. It trades about 0.08 of its potential returns per unit of risk. Dunham Large Cap is currently generating about 0.14 per unit of risk. If you would invest 4,483 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,076 from holding General Motors or generate 24.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Dunham Large Cap
Performance |
| Timeline |
| General Motors |
| Dunham Large Cap |
GM and Dunham Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Dunham Large
The main advantage of trading using opposite GM and Dunham Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Dunham Large 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 Large will offset losses from the drop in Dunham Large's long position.The idea behind General Motors and Dunham Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dunham Large vs. Volumetric Fund Volumetric | Dunham Large vs. Materials Portfolio Fidelity | Dunham Large vs. Balanced Fund Investor | Dunham Large vs. Bbh Intermediate Municipal |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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