Correlation Between Dunham Large and Europe 125x

Can any of the company-specific risk be diversified away by investing in both Dunham Large and Europe 125x 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 Europe 125x 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 Europe 125x Strategy, you can compare the effects of market volatilities on Dunham Large and Europe 125x 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 Europe 125x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Large and Europe 125x.

Diversification Opportunities for Dunham Large and Europe 125x

-0.15

Correlation Coefficient

Dunham Large  Europe 125x

Good diversification

The 3 months correlation between Dunham and Europe is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Large Cap and Europe 125x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europe 125x Strategy 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 Europe 125x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europe 125x Strategy has no effect on the direction of Dunham Large i.e., Dunham Large and Europe 125x go up and down completely randomly.

Pair Corralation between Dunham Large and Europe 125x

Assuming the 90 days horizon Dunham Large Cap is expected to under-perform the Europe 125x. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dunham Large Cap is 1.13 times less risky than Europe 125x. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Europe 125x Strategy is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  10,120  in Europe 125x Strategy on December 26, 2024 and sell it today you would earn a total of  1,534  from holding Europe 125x Strategy or generate 15.16% return on investment over 90 days.

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

Dunham Large Cap  vs.  Europe 125x Strategy

Dunham Large Cap

Risk-Adjusted Performance

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.

Europe 125x Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Europe 125x Strategy are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Europe 125x showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dunham Large and Europe 125x

The main advantage of trading using opposite Dunham Large and Europe 125x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham Large position performs unexpectedly, Europe 125x 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 Europe 125x will offset losses from the drop in Europe 125x's long position.

The idea behind Dunham Large Cap and Europe 125x 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.