Correlation Between Metropolitan West and Dunham Small
Can any of the company-specific risk be diversified away by investing in both Metropolitan West 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 Metropolitan West and Dunham Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Dunham Small Cap, you can compare the effects of market volatilities on Metropolitan West 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 Metropolitan West with a short position of Dunham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Dunham Small.
Diversification Opportunities for Metropolitan West and Dunham Small
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Metropolitan and Dunham is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High 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 Metropolitan West 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 Metropolitan West High 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 Metropolitan West i.e., Metropolitan West and Dunham Small go up and down completely randomly.
Pair Corralation between Metropolitan West and Dunham Small
Assuming the 90 days horizon Metropolitan West High is expected to generate 0.16 times more return on investment than Dunham Small. However, Metropolitan West High is 6.34 times less risky than Dunham Small. It trades about 0.14 of its potential returns per unit of risk. Dunham Small Cap is currently generating about 0.02 per unit of risk. If you would invest 875.00 in Metropolitan West High on December 4, 2024 and sell it today you would earn a total of 58.00 from holding Metropolitan West High or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West High vs. Dunham Small Cap
Performance |
| Timeline |
| Metropolitan West High |
| Dunham Small Cap |
Metropolitan West and Dunham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Dunham Small
The main advantage of trading using opposite Metropolitan West and Dunham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West 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.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Dunham Small vs. Siit High Yield | Dunham Small vs. Intal High Relative | Dunham Small vs. Pace High Yield | Dunham Small vs. Metropolitan West High |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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