Correlation Between Short Real and Dunham Large

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

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

Diversification Opportunities for Short Real and Dunham Large

-0.51

Correlation Coefficient

Short Real  Dunham Large

Excellent diversification

The 3 months correlation between Short and Dunham is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Short Real Estate 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 Short Real 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 Short Real Estate 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 Short Real i.e., Short Real and Dunham Large go up and down completely randomly.

Pair Corralation between Short Real and Dunham Large

Assuming the 90 days horizon Short Real Estate is expected to generate 1.35 times more return on investment than Dunham Large. However, Short Real is 1.35 times more volatile than Dunham Large Cap. It trades about 0.04 of its potential returns per unit of risk. Dunham Large Cap is currently generating about -0.26 per unit of risk. If you would invest  807.00  in Short Real Estate on October 11, 2024 and sell it today you would earn a total of  8.00  from holding Short Real Estate or generate 0.99% return on investment over 90 days.

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

Short Real Estate  vs.  Dunham Large Cap

Short Real Estate

Risk-Adjusted Performance

2 of 100

Weak

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

Dunham Large Cap

Risk-Adjusted Performance

0 of 100

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 Short Real and Dunham Large

The main advantage of trading using opposite Short Real and Dunham Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Real 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 Short Real Estate 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.