Correlation Between Dunham Real and Six Circles

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

By analyzing existing cross correlation between Dunham Real Estate and Six Circles International, you can compare the effects of market volatilities on Dunham Real and Six Circles 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 Real with a short position of Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Real and Six Circles.

Diversification Opportunities for Dunham Real and Six Circles

0.37

Correlation Coefficient

Dunham Real  Six Circles

Weak diversification

The 3 months correlation between Dunham and Six is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Real Estate and Six Circles International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles International and Dunham Real 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 Real Estate are associated (or correlated) with Six Circles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Circles International has no effect on the direction of Dunham Real i.e., Dunham Real and Six Circles go up and down completely randomly.

Pair Corralation between Dunham Real and Six Circles

Assuming the 90 days horizon Dunham Real is expected to generate 1.81 times less return on investment than Six Circles. In addition to that, Dunham Real is 1.22 times more volatile than Six Circles International. It trades about 0.11 of its total potential returns per unit of risk. Six Circles International is currently generating about 0.24 per unit of volatility. If you would invest  1,112  in Six Circles International on September 15, 2024 and sell it today you would earn a total of  31.00  from holding Six Circles International or generate 2.79% return on investment over 90 days.

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

Dunham Real Estate  vs.  Six Circles International

Dunham Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Six Circles International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Six Circles International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Six Circles 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 Real and Six Circles

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

The idea behind Dunham Real Estate and Six Circles International 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.