Correlation Between Small Company and Dunham Large
Can any of the company-specific risk be diversified away by investing in both Small Company 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 Small Company and Dunham Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Dunham Large Cap, you can compare the effects of market volatilities on Small Company 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 Small Company with a short position of Dunham Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Dunham Large.
Diversification Opportunities for Small Company and Dunham Large
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Dunham is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth 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 Small Company 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 Small Pany Growth 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 Small Company i.e., Small Company and Dunham Large go up and down completely randomly.
Pair Corralation between Small Company and Dunham Large
Assuming the 90 days horizon Small Pany Growth is expected to generate 2.88 times more return on investment than Dunham Large. However, Small Company is 2.88 times more volatile than Dunham Large Cap. It trades about 0.17 of its potential returns per unit of risk. Dunham Large Cap is currently generating about 0.15 per unit of risk. If you would invest 1,124 in Small Pany Growth on September 5, 2024 and sell it today you would earn a total of 523.00 from holding Small Pany Growth or generate 46.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Dunham Large Cap
Performance |
| Timeline |
| Small Pany Growth |
| Dunham Large Cap |
Small Company and Dunham Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Dunham Large
The main advantage of trading using opposite Small Company and Dunham Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company 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.| Small Company vs. Mid Cap Growth | Small Company vs. Growth Portfolio Class | Small Company vs. Morgan Stanley Multi | Small Company vs. Emerging Markets Portfolio |
| Dunham Large vs. Glg Intl Small | Dunham Large vs. Tax Managed Mid Small | Dunham Large vs. Small Pany Growth | Dunham Large vs. Us 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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