Correlation Between Bny Mellon and Dunham High

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

By analyzing existing cross correlation between Bny Mellon Municipal and Dunham High Yield, you can compare the effects of market volatilities on Bny Mellon and Dunham High 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 Bny Mellon with a short position of Dunham High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bny Mellon and Dunham High.

Diversification Opportunities for Bny Mellon and Dunham High

0.6

Correlation Coefficient

Bny Mellon  Dunham High

Poor diversification

The 3 months correlation between Bny and Dunham is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Municipal and Dunham High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham High Yield and Bny Mellon 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 Bny Mellon Municipal are associated (or correlated) with Dunham High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham High Yield has no effect on the direction of Bny Mellon i.e., Bny Mellon and Dunham High go up and down completely randomly.

Pair Corralation between Bny Mellon and Dunham High

Assuming the 90 days horizon Bny Mellon is expected to generate 2.02 times less return on investment than Dunham High. But when comparing it to its historical volatility, Bny Mellon Municipal is 1.05 times less risky than Dunham High. It trades about 0.06 of its potential returns per unit of risk. Dunham High Yield is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  741.00  in Dunham High Yield on October 9, 2024 and sell it today you would earn a total of  126.00  from holding Dunham High Yield or generate 17.0% return on investment over 90 days.

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

Bny Mellon Municipal  vs.  Dunham High Yield

Bny Mellon Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dunham High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bny Mellon and Dunham High

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

The idea behind Bny Mellon Municipal and Dunham High Yield 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.