Correlation Between Mid-cap 15x and Dunham Corporate/govern

Can any of the company-specific risk be diversified away by investing in both Mid-cap 15x and Dunham Corporate/govern 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 Mid-cap 15x and Dunham Corporate/govern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap 15x Strategy and Dunham Porategovernment Bond, you can compare the effects of market volatilities on Mid-cap 15x and Dunham Corporate/govern 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 Mid-cap 15x with a short position of Dunham Corporate/govern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap 15x and Dunham Corporate/govern.

Diversification Opportunities for Mid-cap 15x and Dunham Corporate/govern

0.57

Correlation Coefficient

Mid-cap 15x  Dunham Corporate/govern

Very weak diversification

The 3 months correlation between Mid-cap and Dunham is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Dunham Porategovernment Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Porategovernment and Mid-cap 15x 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 Mid Cap 15x Strategy are associated (or correlated) with Dunham Corporate/govern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Porategovernment has no effect on the direction of Mid-cap 15x i.e., Mid-cap 15x and Dunham Corporate/govern go up and down completely randomly.

Pair Corralation between Mid-cap 15x and Dunham Corporate/govern

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 4.65 times more return on investment than Dunham Corporate/govern. However, Mid-cap 15x is 4.65 times more volatile than Dunham Porategovernment Bond. It trades about 0.05 of its potential returns per unit of risk. Dunham Porategovernment Bond is currently generating about 0.04 per unit of risk. If you would invest  9,813  in Mid Cap 15x Strategy on November 27, 2024 and sell it today you would earn a total of  3,187  from holding Mid Cap 15x Strategy or generate 32.48% return on investment over 90 days.

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

Mid Cap 15x Strategy  vs.  Dunham Porategovernment Bond

Mid Cap 15x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap 15x Strategy 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 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.

Dunham Porategovernment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Porategovernment Bond are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dunham Corporate/govern is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid-cap 15x and Dunham Corporate/govern

The main advantage of trading using opposite Mid-cap 15x and Dunham Corporate/govern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap 15x position performs unexpectedly, Dunham Corporate/govern 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 Corporate/govern will offset losses from the drop in Dunham Corporate/govern's long position.

The idea behind Mid Cap 15x Strategy and Dunham Porategovernment Bond 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.