Correlation Between Western Asset and Dunham High
Can any of the company-specific risk be diversified away by investing in both Western Asset and Dunham High 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 High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Dunham High Yield, you can compare the effects of market volatilities on Western Asset and Dunham High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Dunham High.
Diversification Opportunities for Western Asset and Dunham High
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Dunham is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Dunham High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham High Yield 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 Diversified are associated (or correlated) with Dunham High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham High Yield has no effect on the direction of Western Asset i.e., Western Asset and Dunham High go up and down completely randomly.
Pair Corralation between Western Asset and Dunham High
Assuming the 90 days horizon Western Asset is expected to generate 9.02 times less return on investment than Dunham High. In addition to that, Western Asset is 1.34 times more volatile than Dunham High Yield. It trades about 0.01 of its total potential returns per unit of risk. Dunham High Yield is currently generating about 0.14 per unit of volatility. If you would invest 726.00 in Dunham High Yield on September 3, 2024 and sell it today you would earn a total of 148.00 from holding Dunham High Yield or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Dunham High Yield
Performance |
| Timeline |
| Western Asset Diversified |
| Dunham High Yield |
Western Asset and Dunham High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Dunham High
The main advantage of trading using opposite Western Asset and Dunham High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Dunham High 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 High will offset losses from the drop in Dunham High'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 High vs. Western Asset Diversified | Dunham High vs. Harbor Diversified International | Dunham High vs. Massmutual Premier Diversified | Dunham High vs. Adams Diversified Equity |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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