Correlation Between Dunham Focused and Catalyst Insider

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

Diversification Opportunities for Dunham Focused and Catalyst Insider

0.92

Correlation Coefficient

Dunham Focused  Catalyst Insider

Almost no diversification

The 3 months correlation between Dunham and Catalyst is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Focused Large and Catalyst Insider Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Insider Income 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 Catalyst Insider. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Insider Income has no effect on the direction of Dunham Focused i.e., Dunham Focused and Catalyst Insider go up and down completely randomly.

Pair Corralation between Dunham Focused and Catalyst Insider

Assuming the 90 days horizon Dunham Focused Large is expected to under-perform the Catalyst Insider. In addition to that, Dunham Focused is 14.06 times more volatile than Catalyst Insider Income. It trades about -0.02 of its total potential returns per unit of risk. Catalyst Insider Income is currently generating about 0.2 per unit of volatility. If you would invest  893.00  in Catalyst Insider Income on September 29, 2024 and sell it today you would earn a total of  30.00  from holding Catalyst Insider Income or generate 3.36% return on investment over 90 days.

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

Dunham Focused Large  vs.  Catalyst Insider Income

Dunham Focused Large

Risk-Adjusted Performance

0 of 100

OK

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

Catalyst Insider Income

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Insider Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalyst Insider 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 Catalyst Insider

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

The idea behind Dunham Focused Large and Catalyst Insider Income 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 Managers module to screen money managers from public funds and ETFs managed around the world.