Correlation Between Dunham Porategovernment and Dws Government

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

By analyzing existing cross correlation between Dunham Porategovernment Bond and Dws Government Money, you can compare the effects of market volatilities on Dunham Porategovernment and Dws Government 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 Porategovernment with a short position of Dws Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Porategovernment and Dws Government.

Diversification Opportunities for Dunham Porategovernment and Dws Government

0.43

Correlation Coefficient

Dunham Porategovernment  Dws Government

Very weak diversification

The 3 months correlation between Dunham and Dws is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Porategovernment Bond and Dws Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dws Government Money and Dunham Porategovernment 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 Porategovernment Bond are associated (or correlated) with Dws Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dws Government Money has no effect on the direction of Dunham Porategovernment i.e., Dunham Porategovernment and Dws Government go up and down completely randomly.

Pair Corralation between Dunham Porategovernment and Dws Government

Assuming the 90 days horizon Dunham Porategovernment Bond is expected to generate 0.02 times more return on investment than Dws Government. However, Dunham Porategovernment Bond is 49.46 times less risky than Dws Government. It trades about -0.18 of its potential returns per unit of risk. Dws Government Money is currently generating about -0.23 per unit of risk. If you would invest  1,244  in Dunham Porategovernment Bond on January 20, 2024 and sell it today you would lose (19.00) from holding Dunham Porategovernment Bond or give up 1.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.36%
Values	Daily Returns

Dunham Porategovernment Bond  vs.  Dws Government Money

Dunham Porategovernment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dws Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dws Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of inconsistent performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Dunham Porategovernment and Dws Government

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

The idea behind Dunham Porategovernment Bond and Dws Government Money 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.