Correlation Between Tfa Alphagen and Dunham Focused

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

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

Diversification Opportunities for Tfa Alphagen and Dunham Focused

0.79

Correlation Coefficient

Tfa Alphagen  Dunham Focused

Poor diversification

The 3 months correlation between Tfa and Dunham is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tfa Alphagen Growth and Dunham Focused Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Focused Large and Tfa Alphagen 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 Tfa Alphagen Growth are associated (or correlated) with Dunham Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Focused Large has no effect on the direction of Tfa Alphagen i.e., Tfa Alphagen and Dunham Focused go up and down completely randomly.

Pair Corralation between Tfa Alphagen and Dunham Focused

Assuming the 90 days horizon Tfa Alphagen is expected to generate 1.17 times less return on investment than Dunham Focused. But when comparing it to its historical volatility, Tfa Alphagen Growth is 1.66 times less risky than Dunham Focused. It trades about 0.1 of its potential returns per unit of risk. Dunham Focused Large is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,365  in Dunham Focused Large on October 5, 2024 and sell it today you would earn a total of  1,065  from holding Dunham Focused Large or generate 45.03% return on investment over 90 days.

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

Tfa Alphagen Growth  vs.  Dunham Focused Large

Tfa Alphagen Growth

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tfa Alphagen Growth are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Tfa Alphagen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dunham Focused Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dunham Focused Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dunham Focused is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tfa Alphagen and Dunham Focused

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

The idea behind Tfa Alphagen Growth and Dunham Focused Large 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.