Correlation Between Amcap Fund and Dunham Emerging

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

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

Diversification Opportunities for Amcap Fund and Dunham Emerging

-0.06

Correlation Coefficient

Amcap Fund  Dunham Emerging

Good diversification

The 3 months correlation between Amcap and Dunham is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class and Dunham Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Emerging Markets and Amcap 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 Amcap Fund Class are associated (or correlated) with Dunham Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Emerging Markets has no effect on the direction of Amcap Fund i.e., Amcap Fund and Dunham Emerging go up and down completely randomly.

Pair Corralation between Amcap Fund and Dunham Emerging

Assuming the 90 days horizon Amcap Fund Class is expected to under-perform the Dunham Emerging. In addition to that, Amcap Fund is 2.52 times more volatile than Dunham Emerging Markets. It trades about -0.18 of its total potential returns per unit of risk. Dunham Emerging Markets is currently generating about -0.24 per unit of volatility. If you would invest  1,432  in Dunham Emerging Markets on October 10, 2024 and sell it today you would lose (52.00) from holding Dunham Emerging Markets or give up 3.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Amcap Fund Class  vs.  Dunham Emerging Markets

Amcap Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dunham Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Amcap Fund and Dunham Emerging

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

The idea behind Amcap Fund Class and Dunham Emerging Markets 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.