Correlation Between Balanced Fund and Dunham Appreciation

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

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

Diversification Opportunities for Balanced Fund and Dunham Appreciation

-0.32

Correlation Coefficient

Balanced Fund  Dunham Appreciation

Very good diversification

The 3 months correlation between Balanced and Dunham is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Dunham Appreciation Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Appreciation and Balanced Fund 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 Balanced Fund Retail are associated (or correlated) with Dunham Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Appreciation has no effect on the direction of Balanced Fund i.e., Balanced Fund and Dunham Appreciation go up and down completely randomly.

Pair Corralation between Balanced Fund and Dunham Appreciation

Assuming the 90 days horizon Balanced Fund Retail is expected to generate 6.66 times more return on investment than Dunham Appreciation. However, Balanced Fund is 6.66 times more volatile than Dunham Appreciation Income. It trades about 0.03 of its potential returns per unit of risk. Dunham Appreciation Income is currently generating about 0.1 per unit of risk. If you would invest  1,141  in Balanced Fund Retail on October 11, 2024 and sell it today you would earn a total of  124.00  from holding Balanced Fund Retail or generate 10.87% return on investment over 90 days.

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

Balanced Fund Retail  vs.  Dunham Appreciation Income

Balanced Fund Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balanced Fund Retail 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.

Dunham Appreciation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Appreciation Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Dunham Appreciation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Balanced Fund and Dunham Appreciation

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

The idea behind Balanced Fund Retail and Dunham Appreciation Income 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.