Correlation Between Energy Basic and Dunham Large
Can any of the company-specific risk be diversified away by investing in both Energy Basic 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 Energy Basic and Dunham Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Basic Materials and Dunham Large Cap, you can compare the effects of market volatilities on Energy Basic 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 Energy Basic with a short position of Dunham Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Dunham Large.
Diversification Opportunities for Energy Basic and Dunham Large
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Energy and Dunham is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials 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 Energy Basic 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 Energy Basic Materials 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 Energy Basic i.e., Energy Basic and Dunham Large go up and down completely randomly.
Pair Corralation between Energy Basic and Dunham Large
Assuming the 90 days horizon Energy Basic Materials is expected to under-perform the Dunham Large. In addition to that, Energy Basic is 2.15 times more volatile than Dunham Large Cap. It trades about -0.24 of its total potential returns per unit of risk. Dunham Large Cap is currently generating about -0.17 per unit of volatility. If you would invest 2,118 in Dunham Large Cap on September 12, 2024 and sell it today you would lose (32.00) from holding Dunham Large Cap or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Basic Materials vs. Dunham Large Cap
Performance |
| Timeline |
| Energy Basic Materials |
| Dunham Large Cap |
Energy Basic and Dunham Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Basic and Dunham Large
The main advantage of trading using opposite Energy Basic and Dunham Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Basic 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.| Energy Basic vs. Artisan Thematic Fund | Energy Basic vs. T Rowe Price | Energy Basic vs. L Abbett Fundamental | Energy Basic vs. Auer Growth Fund |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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