Correlation Between Dunham Large and Elfun Government

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

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

Diversification Opportunities for Dunham Large and Elfun Government

0.0

Correlation Coefficient

Dunham Large  Elfun Government

Pay attention - limited upside

The 3 months correlation between Dunham and Elfun is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Large Cap and Elfun Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Government Money and Dunham Large 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 Large Cap are associated (or correlated) with Elfun Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Government Money has no effect on the direction of Dunham Large i.e., Dunham Large and Elfun Government go up and down completely randomly.

Pair Corralation between Dunham Large and Elfun Government

Assuming the 90 days horizon Dunham Large is expected to generate 37.0 times less return on investment than Elfun Government. But when comparing it to its historical volatility, Dunham Large Cap is 38.28 times less risky than Elfun Government. It trades about 0.06 of its potential returns per unit of risk. Elfun Government Money is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  369.00  in Elfun Government Money on September 26, 2024 and sell it today you would lose (269.00) from holding Elfun Government Money or give up 72.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.83%
Values	Daily Returns

Dunham Large Cap  vs.  Elfun Government Money

Dunham Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Elfun Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elfun Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Elfun Government 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 Large and Elfun Government

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

The idea behind Dunham Large Cap and Elfun Government Money 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.