Correlation Between Smallcap and Dunham Real

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

By analyzing existing cross correlation between Smallcap Sp 600 and Dunham Real Estate, you can compare the effects of market volatilities on Smallcap and Dunham Real 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 Smallcap with a short position of Dunham Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap and Dunham Real.

Diversification Opportunities for Smallcap and Dunham Real

-0.53

Correlation Coefficient

Smallcap  Dunham Real

Excellent diversification

The 3 months correlation between Smallcap and Dunham is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Sp 600 and Dunham Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Real Estate and Smallcap 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 Smallcap Sp 600 are associated (or correlated) with Dunham Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Real Estate has no effect on the direction of Smallcap i.e., Smallcap and Dunham Real go up and down completely randomly.

Pair Corralation between Smallcap and Dunham Real

If you would invest  1,391  in Dunham Real Estate on October 24, 2024 and sell it today you would earn a total of  22.00  from holding Dunham Real Estate or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.56%
Values	Daily Returns

Smallcap Sp 600  vs.  Dunham Real Estate

Smallcap Sp 600

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Smallcap Sp 600 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Smallcap showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Smallcap and Dunham Real

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

The idea behind Smallcap Sp 600 and Dunham Real Estate 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.