Correlation Between Dunham Focused and Dunham Monthly

Can any of the company-specific risk be diversified away by investing in both Dunham Focused and Dunham Monthly 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 Focused and Dunham Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dunham Focused Large and Dunham Monthly Distribution, you can compare the effects of market volatilities on Dunham Focused and Dunham Monthly 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 Focused with a short position of Dunham Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Focused and Dunham Monthly.

Diversification Opportunities for Dunham Focused and Dunham Monthly

-0.72

Correlation Coefficient

Dunham Focused  Dunham Monthly

Pay attention - limited upside

The 3 months correlation between Dunham and Dunham is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Focused Large and Dunham Monthly Distribution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Monthly Distr and Dunham Focused 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 Focused Large are associated (or correlated) with Dunham Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Monthly Distr has no effect on the direction of Dunham Focused i.e., Dunham Focused and Dunham Monthly go up and down completely randomly.

Pair Corralation between Dunham Focused and Dunham Monthly

Assuming the 90 days horizon Dunham Focused Large is expected to under-perform the Dunham Monthly. In addition to that, Dunham Focused is 14.09 times more volatile than Dunham Monthly Distribution. It trades about -0.14 of its total potential returns per unit of risk. Dunham Monthly Distribution is currently generating about 0.22 per unit of volatility. If you would invest  2,667  in Dunham Monthly Distribution on December 29, 2024 and sell it today you would earn a total of  39.00  from holding Dunham Monthly Distribution or generate 1.46% return on investment over 90 days.

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

Dunham Focused Large  vs.  Dunham Monthly Distribution

Dunham Focused Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dunham Focused Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Dunham Monthly Distr

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Monthly Distribution are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Dunham Monthly is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dunham Focused and Dunham Monthly

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

The idea behind Dunham Focused Large and Dunham Monthly Distribution 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.