Correlation Between Dunham High and Ultramid-cap Profund

Can any of the company-specific risk be diversified away by investing in both Dunham High and Ultramid-cap Profund 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 Ultramid-cap Profund 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 Ultramid Cap Profund Ultramid Cap, you can compare the effects of market volatilities on Dunham High and Ultramid-cap Profund 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 Ultramid-cap Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and Ultramid-cap Profund.

Diversification Opportunities for Dunham High and Ultramid-cap Profund

0.85

Correlation Coefficient

Dunham High  Ultramid-cap Profund

Very poor diversification

The 3 months correlation between Dunham and Ultramid-cap is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and Ultramid Cap Profund Ultramid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultramid Cap Profund 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 Ultramid-cap Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultramid Cap Profund has no effect on the direction of Dunham High i.e., Dunham High and Ultramid-cap Profund go up and down completely randomly.

Pair Corralation between Dunham High and Ultramid-cap Profund

Assuming the 90 days horizon Dunham High is expected to generate 2.46 times less return on investment than Ultramid-cap Profund. But when comparing it to its historical volatility, Dunham High Yield is 8.06 times less risky than Ultramid-cap Profund. It trades about 0.13 of its potential returns per unit of risk. Ultramid Cap Profund Ultramid Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,035  in Ultramid Cap Profund Ultramid Cap on October 10, 2024 and sell it today you would earn a total of  1,698  from holding Ultramid Cap Profund Ultramid Cap or generate 33.72% 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.  Ultramid Cap Profund Ultramid

Dunham High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ultramid Cap Profund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultramid Cap Profund Ultramid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ultramid-cap Profund 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 High and Ultramid-cap Profund

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

The idea behind Dunham High Yield and Ultramid Cap Profund Ultramid Cap 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.