Correlation Between Sp Midcap and Dunham Floating

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

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

Diversification Opportunities for Sp Midcap and Dunham Floating

0.64

Correlation Coefficient

Sp Midcap  Dunham Floating

Poor diversification

The 3 months correlation between SPMIX and Dunham is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap Index and Dunham Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Floating Rate and Sp Midcap 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 Sp Midcap Index are associated (or correlated) with Dunham Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Floating Rate has no effect on the direction of Sp Midcap i.e., Sp Midcap and Dunham Floating go up and down completely randomly.

Pair Corralation between Sp Midcap and Dunham Floating

Assuming the 90 days horizon Sp Midcap Index is expected to under-perform the Dunham Floating. In addition to that, Sp Midcap is 15.27 times more volatile than Dunham Floating Rate. It trades about -0.22 of its total potential returns per unit of risk. Dunham Floating Rate is currently generating about 0.17 per unit of volatility. If you would invest  868.00  in Dunham Floating Rate on September 12, 2024 and sell it today you would earn a total of  4.00  from holding Dunham Floating Rate or generate 0.46% return on investment over 90 days.

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

Sp Midcap Index  vs.  Dunham Floating Rate

Sp Midcap Index

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sp Midcap Index are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Sp Midcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dunham Floating Rate

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Floating Rate are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dunham Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sp Midcap and Dunham Floating

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

The idea behind Sp Midcap Index and Dunham Floating Rate 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.