Correlation Between Dunham Dynamic and Hcm Dividend

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

By analyzing existing cross correlation between Dunham Dynamic Macro and Hcm Dividend Sector, you can compare the effects of market volatilities on Dunham Dynamic and Hcm Dividend 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 Dynamic with a short position of Hcm Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Dynamic and Hcm Dividend.

Diversification Opportunities for Dunham Dynamic and Hcm Dividend

0.73

Correlation Coefficient

Dunham Dynamic  Hcm Dividend

Poor diversification

The 3 months correlation between Dunham and Hcm is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Dynamic Macro and Hcm Dividend Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hcm Dividend Sector and Dunham Dynamic 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 Dynamic Macro are associated (or correlated) with Hcm Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hcm Dividend Sector has no effect on the direction of Dunham Dynamic i.e., Dunham Dynamic and Hcm Dividend go up and down completely randomly.

Pair Corralation between Dunham Dynamic and Hcm Dividend

Assuming the 90 days horizon Dunham Dynamic Macro is expected to generate 0.34 times more return on investment than Hcm Dividend. However, Dunham Dynamic Macro is 2.98 times less risky than Hcm Dividend. It trades about -0.11 of its potential returns per unit of risk. Hcm Dividend Sector is currently generating about -0.11 per unit of risk. If you would invest  1,232  in Dunham Dynamic Macro on December 25, 2024 and sell it today you would lose (34.00) from holding Dunham Dynamic Macro or give up 2.76% of portfolio value over 90 days.

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

Dunham Dynamic Macro  vs.  Hcm Dividend Sector

Dunham Dynamic Macro

Risk-Adjusted Performance

Very Weak

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

Hcm Dividend Sector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hcm Dividend Sector has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Dunham Dynamic and Hcm Dividend

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

The idea behind Dunham Dynamic Macro and Hcm Dividend Sector 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.