Correlation Between Dunham Corporate/govern and Voya Midcap

Can any of the company-specific risk be diversified away by investing in both Dunham Corporate/govern and Voya 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 Dunham Corporate/govern and Voya Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dunham Porategovernment Bond and Voya Midcap Opportunities, you can compare the effects of market volatilities on Dunham Corporate/govern and Voya 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 Dunham Corporate/govern with a short position of Voya Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Corporate/govern and Voya Midcap.

Diversification Opportunities for Dunham Corporate/govern and Voya Midcap

-0.09

Correlation Coefficient

Dunham Corporate/govern  Voya Midcap

Good diversification

The 3 months correlation between Dunham and Voya is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Voya Midcap Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Midcap Opportunities and Dunham Corporate/govern 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 Porategovernment Bond are associated (or correlated) with Voya Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Midcap Opportunities has no effect on the direction of Dunham Corporate/govern i.e., Dunham Corporate/govern and Voya Midcap go up and down completely randomly.

Pair Corralation between Dunham Corporate/govern and Voya Midcap

Assuming the 90 days horizon Dunham Porategovernment Bond is expected to generate 0.17 times more return on investment than Voya Midcap. However, Dunham Porategovernment Bond is 6.01 times less risky than Voya Midcap. It trades about -0.44 of its potential returns per unit of risk. Voya Midcap Opportunities is currently generating about -0.14 per unit of risk. If you would invest  1,268  in Dunham Porategovernment Bond on October 8, 2024 and sell it today you would lose (26.00) from holding Dunham Porategovernment Bond or give up 2.05% of portfolio value over 90 days.

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

Dunham Porategovernment Bond  vs.  Voya Midcap Opportunities

Dunham Porategovernment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Voya Midcap Opportunities

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Dunham Corporate/govern and Voya Midcap

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

The idea behind Dunham Porategovernment Bond and Voya Midcap Opportunities 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.