Correlation Between Lgm Risk and Dunham Porategovernment
Can any of the company-specific risk be diversified away by investing in both Lgm Risk and Dunham Porategovernment 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 Lgm Risk and Dunham Porategovernment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lgm Risk Managed and Dunham Porategovernment Bond, you can compare the effects of market volatilities on Lgm Risk and Dunham Porategovernment 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 Lgm Risk with a short position of Dunham Porategovernment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lgm Risk and Dunham Porategovernment.
Diversification Opportunities for Lgm Risk and Dunham Porategovernment
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lgm and Dunham is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lgm Risk Managed and Dunham Porategovernment Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Porategovernment and Lgm Risk 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 Lgm Risk Managed are associated (or correlated) with Dunham Porategovernment. 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 Lgm Risk i.e., Lgm Risk and Dunham Porategovernment go up and down completely randomly.
Pair Corralation between Lgm Risk and Dunham Porategovernment
Assuming the 90 days horizon Lgm Risk is expected to generate 1.71 times less return on investment than Dunham Porategovernment. But when comparing it to its historical volatility, Lgm Risk Managed is 1.04 times less risky than Dunham Porategovernment. It trades about 0.16 of its potential returns per unit of risk. Dunham Porategovernment Bond is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,250 in Dunham Porategovernment Bond on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Dunham Porategovernment Bond or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lgm Risk Managed vs. Dunham Porategovernment Bond
Performance |
| Timeline |
| Lgm Risk Managed |
| Dunham Porategovernment |
Lgm Risk and Dunham Porategovernment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lgm Risk and Dunham Porategovernment
The main advantage of trading using opposite Lgm Risk and Dunham Porategovernment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lgm Risk position performs unexpectedly, Dunham Porategovernment 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 Porategovernment will offset losses from the drop in Dunham Porategovernment's long position.| Lgm Risk vs. The Gabelli Money | Lgm Risk vs. Matson Money Equity | Lgm Risk vs. Schwab Treasury Money | Lgm Risk vs. Putnam Money Market |
| Dunham Porategovernment vs. Artisan High Income | Dunham Porategovernment vs. Western Asset High | Dunham Porategovernment vs. Ab Global Risk | Dunham Porategovernment vs. Lgm Risk Managed |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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