Correlation Between Western Asset and Dunham Dynamic
Can any of the company-specific risk be diversified away by investing in both Western Asset and Dunham Dynamic 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 Western Asset and Dunham Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Dunham Dynamic Macro, you can compare the effects of market volatilities on Western Asset and Dunham Dynamic 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 Western Asset with a short position of Dunham Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Dunham Dynamic.
Diversification Opportunities for Western Asset and Dunham Dynamic
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Dunham is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Dunham Dynamic Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Dynamic Macro and Western Asset 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 Western Asset Municipal are associated (or correlated) with Dunham Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Dynamic Macro has no effect on the direction of Western Asset i.e., Western Asset and Dunham Dynamic go up and down completely randomly.
Pair Corralation between Western Asset and Dunham Dynamic
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Dunham Dynamic. In addition to that, Western Asset is 1.22 times more volatile than Dunham Dynamic Macro. It trades about -0.13 of its total potential returns per unit of risk. Dunham Dynamic Macro is currently generating about -0.01 per unit of volatility. If you would invest 1,252 in Dunham Dynamic Macro on August 29, 2024 and sell it today you would lose (2.00) from holding Dunham Dynamic Macro or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Dunham Dynamic Macro
Performance |
| Timeline |
| Western Asset Municipal |
| Dunham Dynamic Macro |
Western Asset and Dunham Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Dunham Dynamic
The main advantage of trading using opposite Western Asset and Dunham Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Dunham Dynamic 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 Dynamic will offset losses from the drop in Dunham Dynamic's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Dunham Dynamic vs. Western Asset Municipal | Dunham Dynamic vs. Rbb Fund | Dunham Dynamic vs. Aam Select Income | Dunham Dynamic vs. Volumetric Fund Volumetric |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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