Correlation Between Dunham Monthly and Direxion Hilton

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

Diversification Opportunities for Dunham Monthly and Direxion Hilton

0.31

Correlation Coefficient

Dunham Monthly  Direxion Hilton

Weak diversification

The 3 months correlation between Dunham and Direxion is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Monthly Distribution and Direxion Hilton Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Hilton Tactical 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 Direxion Hilton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Hilton Tactical has no effect on the direction of Dunham Monthly i.e., Dunham Monthly and Direxion Hilton go up and down completely randomly.

Pair Corralation between Dunham Monthly and Direxion Hilton

Assuming the 90 days horizon Dunham Monthly is expected to generate 1.07 times less return on investment than Direxion Hilton. But when comparing it to its historical volatility, Dunham Monthly Distribution is 1.43 times less risky than Direxion Hilton. It trades about 0.11 of its potential returns per unit of risk. Direxion Hilton Tactical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,749  in Direxion Hilton Tactical on September 28, 2024 and sell it today you would earn a total of  70.00  from holding Direxion Hilton Tactical or generate 4.0% return on investment over 90 days.

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

Dunham Monthly Distribution  vs.  Direxion Hilton Tactical

Dunham Monthly Distr

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Monthly Distribution are ranked lower than 7 (%) 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.

Direxion Hilton Tactical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Hilton Tactical has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Direxion Hilton 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 Monthly and Direxion Hilton

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

The idea behind Dunham Monthly Distribution and Direxion Hilton Tactical 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.