Correlation Between Dunham Corporate/govern and Mid-cap 15x

Can any of the company-specific risk be diversified away by investing in both Dunham Corporate/govern and Mid-cap 15x 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 Dunham Corporate/govern and Mid-cap 15x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dunham Porategovernment Bond and Mid Cap 15x Strategy, you can compare the effects of market volatilities on Dunham Corporate/govern and Mid-cap 15x 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 Dunham Corporate/govern with a short position of Mid-cap 15x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Corporate/govern and Mid-cap 15x.

Diversification Opportunities for Dunham Corporate/govern and Mid-cap 15x

-0.61

Correlation Coefficient

Dunham Corporate/govern  Mid-cap 15x

Excellent diversification

The 3 months correlation between Dunham and Mid-cap is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Mid Cap 15x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap 15x and Dunham Corporate/govern 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 Dunham Porategovernment Bond are associated (or correlated) with Mid-cap 15x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap 15x has no effect on the direction of Dunham Corporate/govern i.e., Dunham Corporate/govern and Mid-cap 15x go up and down completely randomly.

Pair Corralation between Dunham Corporate/govern and Mid-cap 15x

Assuming the 90 days horizon Dunham Porategovernment Bond is expected to under-perform the Mid-cap 15x. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dunham Porategovernment Bond is 5.39 times less risky than Mid-cap 15x. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Mid Cap 15x Strategy is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  12,728  in Mid Cap 15x Strategy on September 3, 2024 and sell it today you would earn a total of  2,190  from holding Mid Cap 15x Strategy or generate 17.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Dunham Porategovernment Bond  vs.  Mid Cap 15x Strategy

Dunham Porategovernment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dunham Porategovernment Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dunham Corporate/govern is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mid Cap 15x

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap 15x Strategy are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Mid-cap 15x showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dunham Corporate/govern and Mid-cap 15x

The main advantage of trading using opposite Dunham Corporate/govern and Mid-cap 15x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Corporate/govern position performs unexpectedly, Mid-cap 15x 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 Mid-cap 15x will offset losses from the drop in Mid-cap 15x's long position.

The idea behind Dunham Porategovernment Bond and Mid Cap 15x Strategy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.