Correlation Between Dunham Corporate/govern and Virtus Seix

Can any of the company-specific risk be diversified away by investing in both Dunham Corporate/govern and Virtus Seix 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 Virtus Seix 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 Virtus Seix Government, you can compare the effects of market volatilities on Dunham Corporate/govern and Virtus Seix 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 Virtus Seix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Corporate/govern and Virtus Seix.

Diversification Opportunities for Dunham Corporate/govern and Virtus Seix

0.83

Correlation Coefficient

Dunham Corporate/govern  Virtus Seix

Very poor diversification

The 3 months correlation between DUNHAM and Virtus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Virtus Seix Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Seix Government 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 Virtus Seix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Seix Government has no effect on the direction of Dunham Corporate/govern i.e., Dunham Corporate/govern and Virtus Seix go up and down completely randomly.

Pair Corralation between Dunham Corporate/govern and Virtus Seix

Assuming the 90 days horizon Dunham Porategovernment Bond is expected to generate 2.58 times more return on investment than Virtus Seix. However, Dunham Corporate/govern is 2.58 times more volatile than Virtus Seix Government. It trades about 0.16 of its potential returns per unit of risk. Virtus Seix Government is currently generating about 0.25 per unit of risk. If you would invest  1,232  in Dunham Porategovernment Bond on December 21, 2024 and sell it today you would earn a total of  30.00  from holding Dunham Porategovernment Bond or generate 2.44% return on investment over 90 days.

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

Dunham Porategovernment Bond  vs.  Virtus Seix Government

Dunham Porategovernment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Porategovernment Bond are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. 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.

Virtus Seix Government

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Seix Government are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Virtus Seix 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 Corporate/govern and Virtus Seix

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

The idea behind Dunham Porategovernment Bond and Virtus Seix Government 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.