Correlation Between Dunham Monthly and Columbia Global

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

By analyzing existing cross correlation between Dunham Monthly Distribution and Columbia Global Technology, you can compare the effects of market volatilities on Dunham Monthly and Columbia Global 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 Monthly with a short position of Columbia Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Monthly and Columbia Global.

Diversification Opportunities for Dunham Monthly and Columbia Global

0.54

Correlation Coefficient

Dunham Monthly  Columbia Global

Very weak diversification

The 3 months correlation between Dunham and Columbia is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Monthly Distribution and Columbia Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Tech and Dunham Monthly 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 Monthly Distribution are associated (or correlated) with Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Tech has no effect on the direction of Dunham Monthly i.e., Dunham Monthly and Columbia Global go up and down completely randomly.

Pair Corralation between Dunham Monthly and Columbia Global

Assuming the 90 days horizon Dunham Monthly Distribution is expected to generate 0.21 times more return on investment than Columbia Global. However, Dunham Monthly Distribution is 4.79 times less risky than Columbia Global. It trades about -0.02 of its potential returns per unit of risk. Columbia Global Technology is currently generating about -0.04 per unit of risk. If you would invest  2,892  in Dunham Monthly Distribution on October 3, 2024 and sell it today you would lose (3.00) from holding Dunham Monthly Distribution or give up 0.1% of portfolio value over 90 days.

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

Dunham Monthly Distribution  vs.  Columbia Global Technology

Dunham Monthly Distr

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Monthly Distribution are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Dunham Monthly is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Global Tech

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dunham Monthly and Columbia Global

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

The idea behind Dunham Monthly Distribution and Columbia Global Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.