Correlation Between Doubleline Core and Small Midcap

Can any of the company-specific risk be diversified away by investing in both Doubleline Core and Small Midcap 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 Doubleline Core and Small Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Doubleline Core Fixed and Small Midcap Dividend Income, you can compare the effects of market volatilities on Doubleline Core and Small Midcap 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 Doubleline Core with a short position of Small Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doubleline Core and Small Midcap.

Diversification Opportunities for Doubleline Core and Small Midcap

0.58

Correlation Coefficient

Doubleline Core  Small Midcap

Very weak diversification

The 3 months correlation between Doubleline and Small is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Doubleline Core Fixed and Small Midcap Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Midcap Dividend and Doubleline Core 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 Doubleline Core Fixed are associated (or correlated) with Small Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Midcap Dividend has no effect on the direction of Doubleline Core i.e., Doubleline Core and Small Midcap go up and down completely randomly.

Pair Corralation between Doubleline Core and Small Midcap

Assuming the 90 days horizon Doubleline Core Fixed is expected to generate 0.19 times more return on investment than Small Midcap. However, Doubleline Core Fixed is 5.2 times less risky than Small Midcap. It trades about -0.45 of its potential returns per unit of risk. Small Midcap Dividend Income is currently generating about -0.35 per unit of risk. If you would invest  932.00  in Doubleline Core Fixed on October 10, 2024 and sell it today you would lose (20.00) from holding Doubleline Core Fixed or give up 2.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Doubleline Core Fixed  vs.  Small Midcap Dividend Income

Doubleline Core Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Small Midcap Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Doubleline Core and Small Midcap

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

The idea behind Doubleline Core Fixed and Small Midcap Dividend 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.

Check out your portfolio center.

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.