Correlation Between Small-cap Value and Dunham Corporate/govern

Can any of the company-specific risk be diversified away by investing in both Small-cap Value 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 Small-cap Value 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 Small Cap Value Profund and Dunham Porategovernment Bond, you can compare the effects of market volatilities on Small-cap Value 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 Small-cap Value with a short position of Dunham Corporate/govern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Dunham Corporate/govern.

Diversification Opportunities for Small-cap Value and Dunham Corporate/govern

-0.72

Correlation Coefficient

Small-cap Value  Dunham Corporate/govern

Pay attention - limited upside

The 3 months correlation between Small-cap and Dunham is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Profund and Dunham Porategovernment Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Porategovernment and Small-cap Value 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 Small Cap Value Profund 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 Small-cap Value i.e., Small-cap Value and Dunham Corporate/govern go up and down completely randomly.

Pair Corralation between Small-cap Value and Dunham Corporate/govern

Assuming the 90 days horizon Small Cap Value Profund is expected to under-perform the Dunham Corporate/govern. In addition to that, Small-cap Value is 4.35 times more volatile than Dunham Porategovernment Bond. It trades about -0.15 of its total potential returns per unit of risk. Dunham Porategovernment Bond is currently generating about 0.12 per unit of volatility. If you would invest  1,233  in Dunham Porategovernment Bond on December 26, 2024 and sell it today you would earn a total of  22.00  from holding Dunham Porategovernment Bond or generate 1.78% return on investment over 90 days.

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

Small Cap Value Profund  vs.  Dunham Porategovernment Bond

Small Cap Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Cap Value Profund 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 Porategovernment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Porategovernment Bond are ranked lower than 9 (%) 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 Small-cap Value and Dunham Corporate/govern

The main advantage of trading using opposite Small-cap Value and Dunham Corporate/govern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-cap Value 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 Small Cap Value Profund 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.