Correlation Between T Rowe and Dunham Large

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

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

Diversification Opportunities for T Rowe and Dunham Large

0.34

Correlation Coefficient

T Rowe  Dunham Large

Weak diversification

The 3 months correlation between PAEIX and Dunham is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Dunham Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Large Cap and T Rowe 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 T Rowe Price are associated (or correlated) with Dunham Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Large Cap has no effect on the direction of T Rowe i.e., T Rowe and Dunham Large go up and down completely randomly.

Pair Corralation between T Rowe and Dunham Large

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Dunham Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, T Rowe Price is 1.31 times less risky than Dunham Large. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Dunham Large Cap is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,031  in Dunham Large Cap on October 7, 2024 and sell it today you would lose (107.00) from holding Dunham Large Cap or give up 5.27% of portfolio value over 90 days.

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

T Rowe Price  vs.  Dunham Large Cap

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Dunham Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with T Rowe and Dunham Large

The main advantage of trading using opposite T Rowe and Dunham Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Dunham Large 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 Large will offset losses from the drop in Dunham Large's long position.

The idea behind T Rowe Price and Dunham Large Cap 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 Commodity Directory module to find actively traded commodities issued by global exchanges.