Correlation Between Dunham Real and Holbrook Income

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

By analyzing existing cross correlation between Dunham Real Estate and Holbrook Income Fund, you can compare the effects of market volatilities on Dunham Real and Holbrook Income 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 Real with a short position of Holbrook Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Real and Holbrook Income.

Diversification Opportunities for Dunham Real and Holbrook Income

-0.27

Correlation Coefficient

Dunham Real  Holbrook Income

Very good diversification

The 3 months correlation between Dunham and Holbrook is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Real Estate and Holbrook Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holbrook Income and Dunham Real 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 Real Estate are associated (or correlated) with Holbrook Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holbrook Income has no effect on the direction of Dunham Real i.e., Dunham Real and Holbrook Income go up and down completely randomly.

Pair Corralation between Dunham Real and Holbrook Income

Assuming the 90 days horizon Dunham Real Estate is expected to generate 4.11 times more return on investment than Holbrook Income. However, Dunham Real is 4.11 times more volatile than Holbrook Income Fund. It trades about 0.04 of its potential returns per unit of risk. Holbrook Income Fund is currently generating about 0.14 per unit of risk. If you would invest  1,288  in Dunham Real Estate on October 24, 2024 and sell it today you would earn a total of  125.00  from holding Dunham Real Estate or generate 9.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Dunham Real Estate  vs.  Holbrook Income Fund

Dunham Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Holbrook Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Holbrook Income Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Holbrook Income 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 Real and Holbrook Income

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

The idea behind Dunham Real Estate and Holbrook Income Fund 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.