Correlation Between Multisector Bond and Dunham Small
Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Dunham Small 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 Multisector Bond and Dunham Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Dunham Small Cap, you can compare the effects of market volatilities on Multisector Bond and Dunham Small 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 Multisector Bond with a short position of Dunham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Dunham Small.
Diversification Opportunities for Multisector Bond and Dunham Small
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Multisector and Dunham is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Dunham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Small Cap and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Dunham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Small Cap has no effect on the direction of Multisector Bond i.e., Multisector Bond and Dunham Small go up and down completely randomly.
Pair Corralation between Multisector Bond and Dunham Small
Assuming the 90 days horizon Multisector Bond is expected to generate 1.99 times less return on investment than Dunham Small. But when comparing it to its historical volatility, Multisector Bond Sma is 4.19 times less risky than Dunham Small. It trades about 0.18 of its potential returns per unit of risk. Dunham Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,673 in Dunham Small Cap on September 3, 2024 and sell it today you would earn a total of 264.00 from holding Dunham Small Cap or generate 15.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multisector Bond Sma vs. Dunham Small Cap
Performance |
| Timeline |
| Multisector Bond Sma |
| Dunham Small Cap |
Multisector Bond and Dunham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and Dunham Small
The main advantage of trading using opposite Multisector Bond and Dunham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond position performs unexpectedly, Dunham Small 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 Small will offset losses from the drop in Dunham Small's long position.| Multisector Bond vs. Queens Road Small | Multisector Bond vs. American Century Etf | Multisector Bond vs. Victory Rs Partners | Multisector Bond vs. Vanguard Small Cap Value |
| Dunham Small vs. Rationalpier 88 Convertible | Dunham Small vs. Putnam Convertible Incm Gwth | Dunham Small vs. Rationalpier 88 Convertible | Dunham Small vs. Advent Claymore Convertible |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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