Correlation Between NYSE Composite and Dunham International
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Dunham International 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 NYSE Composite and Dunham International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Dunham International Opportunity, you can compare the effects of market volatilities on NYSE Composite and Dunham International 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 NYSE Composite with a short position of Dunham International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Dunham International.
Diversification Opportunities for NYSE Composite and Dunham International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Dunham is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Dunham International Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham International and NYSE Composite 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 NYSE Composite are associated (or correlated) with Dunham International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham International has no effect on the direction of NYSE Composite i.e., NYSE Composite and Dunham International go up and down completely randomly.
Pair Corralation between NYSE Composite and Dunham International
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.8 times more return on investment than Dunham International. However, NYSE Composite is 2.8 times more volatile than Dunham International Opportunity. It trades about 0.11 of its potential returns per unit of risk. Dunham International Opportunity is currently generating about 0.16 per unit of risk. If you would invest 1,554,847 in NYSE Composite on September 3, 2024 and sell it today you would earn a total of 472,357 from holding NYSE Composite or generate 30.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Dunham International Opportuni
Performance |
| Timeline |
NYSE Composite and Dunham International Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Dunham International Opportunity
Pair trading matchups for Dunham International
Pair Trading with NYSE Composite and Dunham International
The main advantage of trading using opposite NYSE Composite and Dunham International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Dunham International 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 International will offset losses from the drop in Dunham International's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Dunham International vs. Aqr Long Short Equity | Dunham International vs. Angel Oak Ultrashort | Dunham International vs. Calvert Short Duration | Dunham International vs. Rbc Short Duration |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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