Correlation Between Qs Large and Dunham Focused

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

By analyzing existing cross correlation between Qs Large Cap and Dunham Focused Large, you can compare the effects of market volatilities on Qs Large and Dunham Focused 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 Qs Large with a short position of Dunham Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Large and Dunham Focused.

Diversification Opportunities for Qs Large and Dunham Focused

0.57

Correlation Coefficient

Qs Large  Dunham Focused

Very weak diversification

The 3 months correlation between LMUSX and Dunham is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Qs Large Cap and Dunham Focused Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Focused Large and Qs Large 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 Qs Large Cap are associated (or correlated) with Dunham Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Focused Large has no effect on the direction of Qs Large i.e., Qs Large and Dunham Focused go up and down completely randomly.

Pair Corralation between Qs Large and Dunham Focused

Assuming the 90 days horizon Qs Large Cap is expected to generate 0.49 times more return on investment than Dunham Focused. However, Qs Large Cap is 2.05 times less risky than Dunham Focused. It trades about -0.1 of its potential returns per unit of risk. Dunham Focused Large is currently generating about -0.12 per unit of risk. If you would invest  2,598  in Qs Large Cap on November 29, 2024 and sell it today you would lose (156.00) from holding Qs Large Cap or give up 6.0% of portfolio value over 90 days.

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

Qs Large Cap  vs.  Dunham Focused Large

Qs Large Cap

Risk-Adjusted Performance

Very Weak

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

Dunham Focused Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dunham Focused Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Qs Large and Dunham Focused

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

The idea behind Qs Large Cap and Dunham Focused Large 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 CEOs Directory module to screen CEOs from public companies around the world.