Correlation Between Dunham High and American Beacon
Can any of the company-specific risk be diversified away by investing in both Dunham High and American Beacon 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 High and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham High Yield and American Beacon Ssi, you can compare the effects of market volatilities on Dunham High and American Beacon 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 High with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and American Beacon.
Diversification Opportunities for Dunham High and American Beacon
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dunham and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and American Beacon Ssi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ssi and Dunham High 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 High Yield are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Ssi has no effect on the direction of Dunham High i.e., Dunham High and American Beacon go up and down completely randomly.
Pair Corralation between Dunham High and American Beacon
Assuming the 90 days horizon Dunham High Yield is expected to generate 2.38 times more return on investment than American Beacon. However, Dunham High is 2.38 times more volatile than American Beacon Ssi. It trades about 0.35 of its potential returns per unit of risk. American Beacon Ssi is currently generating about 0.43 per unit of risk. If you would invest 861.00 in Dunham High Yield on October 24, 2024 and sell it today you would earn a total of 10.00 from holding Dunham High Yield or generate 1.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dunham High Yield vs. American Beacon Ssi
Performance |
Timeline |
Dunham High Yield |
American Beacon Ssi |
Dunham High and American Beacon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dunham High and American Beacon
The main advantage of trading using opposite Dunham High and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham High position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.Dunham High vs. Calvert Developed Market | Dunham High vs. T Rowe Price | Dunham High vs. Barings Emerging Markets | Dunham High vs. Siit Emerging Markets |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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