Correlation Between Health Care and Dunham Porategovernment
Can any of the company-specific risk be diversified away by investing in both Health Care 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 Health Care and Dunham Porategovernment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Fund and Dunham Porategovernment Bond, you can compare the effects of market volatilities on Health Care 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 Health Care with a short position of Dunham Porategovernment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Dunham Porategovernment.
Diversification Opportunities for Health Care and Dunham Porategovernment
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Health and Dunham is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Dunham Porategovernment Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Porategovernment and Health Care 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 Health Care Fund 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 Health Care i.e., Health Care and Dunham Porategovernment go up and down completely randomly.
Pair Corralation between Health Care and Dunham Porategovernment
Assuming the 90 days horizon Health Care Fund is expected to generate 2.23 times more return on investment than Dunham Porategovernment. However, Health Care is 2.23 times more volatile than Dunham Porategovernment Bond. It trades about 0.03 of its potential returns per unit of risk. Dunham Porategovernment Bond is currently generating about 0.05 per unit of risk. If you would invest 2,752 in Health Care Fund on September 12, 2024 and sell it today you would earn a total of 270.00 from holding Health Care Fund or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Fund vs. Dunham Porategovernment Bond
Performance |
| Timeline |
| Health Care Fund |
| Dunham Porategovernment |
Health Care and Dunham Porategovernment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Dunham Porategovernment
The main advantage of trading using opposite Health Care and Dunham Porategovernment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care 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.| Health Care vs. Health Biotchnology Portfolio | Health Care vs. Health Care Fund | Health Care vs. Health Care Fund | Health Care vs. Health Care Fund |
| Dunham Porategovernment vs. Metropolitan West Total | Dunham Porategovernment vs. SCOR PK | Dunham Porategovernment vs. Morningstar Unconstrained Allocation | Dunham Porategovernment vs. Thrivent High Yield |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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