Correlation Between Sp Midcap and Dunham Emerging

Can any of the company-specific risk be diversified away by investing in both Sp Midcap 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 Sp Midcap and Dunham Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Sp Midcap 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 Sp Midcap with a short position of Dunham Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Midcap and Dunham Emerging.

Diversification Opportunities for Sp Midcap and Dunham Emerging

0.33

Correlation Coefficient

Sp Midcap  Dunham Emerging

Weak diversification

The 3 months correlation between SPMIX and DUNHAM is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap Index 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 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 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 Sp Midcap i.e., Sp Midcap and Dunham Emerging go up and down completely randomly.

Pair Corralation between Sp Midcap and Dunham Emerging

Assuming the 90 days horizon Sp Midcap is expected to generate 1.07 times less return on investment than Dunham Emerging. In addition to that, Sp Midcap is 1.22 times more volatile than Dunham Emerging Markets. It trades about 0.03 of its total potential returns per unit of risk. Dunham Emerging Markets is currently generating about 0.04 per unit of volatility. If you would invest  1,279  in Dunham Emerging Markets on October 24, 2024 and sell it today you would earn a total of  110.00  from holding Dunham Emerging Markets or generate 8.6% return on investment over 90 days.

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

Sp Midcap Index  vs.  Dunham Emerging Markets

Sp Midcap Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sp Midcap Index has generated negative risk-adjusted returns adding no value to fund investors. 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 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 Sp Midcap and Dunham Emerging

The main advantage of trading using opposite Sp Midcap and Dunham Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Midcap 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 Sp Midcap Index 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..