Correlation Between Dunham Appreciation and Dunham Dynamic

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

By analyzing existing cross correlation between Dunham Appreciation Income and Dunham Dynamic Macro, you can compare the effects of market volatilities on Dunham Appreciation and Dunham Dynamic 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 Dunham Appreciation with a short position of Dunham Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Appreciation and Dunham Dynamic.

Diversification Opportunities for Dunham Appreciation and Dunham Dynamic

0.52

Correlation Coefficient

Dunham Appreciation  Dunham Dynamic

Very weak diversification

The 3 months correlation between Dunham and Dunham is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Appreciation Income and Dunham Dynamic Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Dynamic Macro and Dunham Appreciation 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 Dunham Appreciation Income are associated (or correlated) with Dunham Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Dynamic Macro has no effect on the direction of Dunham Appreciation i.e., Dunham Appreciation and Dunham Dynamic go up and down completely randomly.

Pair Corralation between Dunham Appreciation and Dunham Dynamic

Assuming the 90 days horizon Dunham Appreciation is expected to generate 2.71 times less return on investment than Dunham Dynamic. But when comparing it to its historical volatility, Dunham Appreciation Income is 2.97 times less risky than Dunham Dynamic. It trades about 0.1 of its potential returns per unit of risk. Dunham Dynamic Macro is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,203  in Dunham Dynamic Macro on February 12, 2024 and sell it today you would earn a total of  11.00  from holding Dunham Dynamic Macro or generate 0.91% return on investment over 90 days.

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

Dunham Appreciation Income  vs.  Dunham Dynamic Macro

Dunham Appreciation

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Appreciation Income are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Dunham Appreciation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dunham Dynamic Macro

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Dynamic Macro are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dunham Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dunham Appreciation and Dunham Dynamic

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

The idea behind Dunham Appreciation Income and Dunham Dynamic Macro 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.