Correlation Between Dunham High and Federated Clover
Can any of the company-specific risk be diversified away by investing in both Dunham High and Federated Clover 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 High and Federated Clover into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham High Yield and Federated Clover Small, you can compare the effects of market volatilities on Dunham High and Federated Clover 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 High with a short position of Federated Clover. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and Federated Clover.
Diversification Opportunities for Dunham High and Federated Clover
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dunham and Federated is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and Federated Clover Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Clover Small and Dunham High 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 High Yield are associated (or correlated) with Federated Clover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Clover Small has no effect on the direction of Dunham High i.e., Dunham High and Federated Clover go up and down completely randomly.
Pair Corralation between Dunham High and Federated Clover
Assuming the 90 days horizon Dunham High Yield is expected to generate 0.22 times more return on investment than Federated Clover. However, Dunham High Yield is 4.52 times less risky than Federated Clover. It trades about 0.0 of its potential returns per unit of risk. Federated Clover Small is currently generating about -0.19 per unit of risk. If you would invest 885.00 in Dunham High Yield on December 1, 2024 and sell it today you would earn a total of 0.00 from holding Dunham High Yield or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Dunham High Yield vs. Federated Clover Small
Performance |
Timeline |
Dunham High Yield |
Federated Clover Small |
Dunham High and Federated Clover Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dunham High and Federated Clover
The main advantage of trading using opposite Dunham High and Federated Clover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham High position performs unexpectedly, Federated Clover 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 Federated Clover will offset losses from the drop in Federated Clover's long position.Dunham High vs. Vanguard Target Retirement | Dunham High vs. Fidelity Managed Retirement | Dunham High vs. Voya Retirement Growth | Dunham High vs. Tiaa Cref Lifestyle Moderate |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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