Correlation Between Dunham Monthly and Dunham Small

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

Diversification Opportunities for Dunham Monthly and Dunham Small

-0.48

Correlation Coefficient

Dunham Monthly  Dunham Small

Very good diversification

The 3 months correlation between Dunham and Dunham is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Monthly Distribution and Dunham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Small Cap 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 Dunham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Small Cap has no effect on the direction of Dunham Monthly i.e., Dunham Monthly and Dunham Small go up and down completely randomly.

Pair Corralation between Dunham Monthly and Dunham Small

Assuming the 90 days horizon Dunham Monthly Distribution is expected to generate 0.07 times more return on investment than Dunham Small. However, Dunham Monthly Distribution is 13.61 times less risky than Dunham Small. It trades about 0.24 of its potential returns per unit of risk. Dunham Small Cap is currently generating about -0.14 per unit of risk. If you would invest  2,843  in Dunham Monthly Distribution on December 29, 2024 and sell it today you would earn a total of  43.00  from holding Dunham Monthly Distribution or generate 1.51% return on investment over 90 days.

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

Dunham Monthly Distribution  vs.  Dunham Small Cap

Dunham Monthly Distr

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Monthly Distribution are ranked lower than 18 (%) 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.

Dunham Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dunham Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Dunham Monthly and Dunham Small

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

The idea behind Dunham Monthly Distribution and Dunham Small 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.

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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.