Correlation Between Valic Company and Dunham High

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

By analyzing existing cross correlation between Valic Company I and Dunham High Yield, you can compare the effects of market volatilities on Valic Company and Dunham High 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 Valic Company with a short position of Dunham High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Dunham High.

Diversification Opportunities for Valic Company and Dunham High

0.92

Correlation Coefficient

Valic Company  Dunham High

Almost no diversification

The 3 months correlation between Valic and Dunham is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and Dunham High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham High Yield and Valic Company 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 Valic Company I are associated (or correlated) with Dunham High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham High Yield has no effect on the direction of Valic Company i.e., Valic Company and Dunham High go up and down completely randomly.

Pair Corralation between Valic Company and Dunham High

Assuming the 90 days horizon Valic Company I is expected to generate 1.1 times more return on investment than Dunham High. However, Valic Company is 1.1 times more volatile than Dunham High Yield. It trades about 0.21 of its potential returns per unit of risk. Dunham High Yield is currently generating about 0.18 per unit of risk. If you would invest  714.00  in Valic Company I on September 2, 2024 and sell it today you would earn a total of  15.00  from holding Valic Company I or generate 2.1% return on investment over 90 days.

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

Valic Company I  vs.  Dunham High Yield

Valic Company I

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valic Company I are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Valic Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dunham High Yield

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham High Yield are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dunham High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Valic Company and Dunham High

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

The idea behind Valic Company I and Dunham High Yield 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.