Correlation Between Dunham Focused and Fidelity Capital

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

Diversification Opportunities for Dunham Focused and Fidelity Capital

0.87

Correlation Coefficient

Dunham Focused  Fidelity Capital

Very poor diversification

The 3 months correlation between Dunham and Fidelity is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Focused Large and Fidelity Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Capital App 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 Fidelity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Capital App has no effect on the direction of Dunham Focused i.e., Dunham Focused and Fidelity Capital go up and down completely randomly.

Pair Corralation between Dunham Focused and Fidelity Capital

Assuming the 90 days horizon Dunham Focused Large is expected to generate 1.32 times more return on investment than Fidelity Capital. However, Dunham Focused is 1.32 times more volatile than Fidelity Capital Appreciation. It trades about 0.14 of its potential returns per unit of risk. Fidelity Capital Appreciation is currently generating about 0.06 per unit of risk. If you would invest  3,831  in Dunham Focused Large on September 26, 2024 and sell it today you would earn a total of  269.00  from holding Dunham Focused Large or generate 7.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.62%
Values	Daily Returns

Dunham Focused Large  vs.  Fidelity Capital Appreciation

Dunham Focused Large

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Focused Large are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dunham Focused may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Capital App

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Capital Appreciation are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Capital 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 Fidelity Capital

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

The idea behind Dunham Focused Large and Fidelity Capital Appreciation 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.