Correlation Between Dunham Corporate/govern and Columbia Seligman

Can any of the company-specific risk be diversified away by investing in both Dunham Corporate/govern and Columbia Seligman 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 Columbia Seligman 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 Columbia Seligman Global, you can compare the effects of market volatilities on Dunham Corporate/govern and Columbia Seligman 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 Columbia Seligman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Corporate/govern and Columbia Seligman.

Diversification Opportunities for Dunham Corporate/govern and Columbia Seligman

-0.67

Correlation Coefficient

Dunham Corporate/govern  Columbia Seligman

Excellent diversification

The 3 months correlation between Dunham and Columbia is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Columbia Seligman Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman Global 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 Columbia Seligman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Seligman Global has no effect on the direction of Dunham Corporate/govern i.e., Dunham Corporate/govern and Columbia Seligman go up and down completely randomly.

Pair Corralation between Dunham Corporate/govern and Columbia Seligman

Assuming the 90 days horizon Dunham Porategovernment Bond is expected to under-perform the Columbia Seligman. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dunham Porategovernment Bond is 4.2 times less risky than Columbia Seligman. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Columbia Seligman Global is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  7,266  in Columbia Seligman Global on September 4, 2024 and sell it today you would earn a total of  1,109  from holding Columbia Seligman Global or generate 15.26% 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.  Columbia Seligman Global

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.

Columbia Seligman Global

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Seligman Global are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Seligman showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dunham Corporate/govern and Columbia Seligman

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

The idea behind Dunham Porategovernment Bond and Columbia Seligman Global 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.