Correlation Between Spirit Of and Dunham Large

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

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

Diversification Opportunities for Spirit Of and Dunham Large

0.68

Correlation Coefficient

Spirit Of  Dunham Large

Poor diversification

The 3 months correlation between Spirit and Dunham is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Of America 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 Spirit Of 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 Spirit Of America 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 Spirit Of i.e., Spirit Of and Dunham Large go up and down completely randomly.

Pair Corralation between Spirit Of and Dunham Large

Assuming the 90 days horizon Spirit Of America is expected to under-perform the Dunham Large. In addition to that, Spirit Of is 1.82 times more volatile than Dunham Large Cap. It trades about -0.16 of its total potential returns per unit of risk. Dunham Large Cap is currently generating about -0.11 per unit of volatility. If you would invest  1,993  in Dunham Large Cap on December 5, 2024 and sell it today you would lose (29.00) from holding Dunham Large Cap or give up 1.46% of portfolio value over 90 days.

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

Spirit Of America  vs.  Dunham Large Cap

Spirit Of America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spirit Of America has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Spirit Of and Dunham Large

The main advantage of trading using opposite Spirit Of and Dunham Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Of 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 Spirit Of America 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.