Correlation Between Dws Government and Dunham Porategovernment

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

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

Diversification Opportunities for Dws Government and Dunham Porategovernment

0.41

Correlation Coefficient

Dws Government  Dunham Porategovernment

Very weak diversification

The 3 months correlation between Dws and Dunham is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dws Government Money and Dunham Porategovernment Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Porategovernment and Dws Government 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 Dws Government Money are associated (or correlated) with Dunham Porategovernment. 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 Dws Government i.e., Dws Government and Dunham Porategovernment go up and down completely randomly.

Pair Corralation between Dws Government and Dunham Porategovernment

Assuming the 90 days horizon Dws Government Money is expected to under-perform the Dunham Porategovernment. In addition to that, Dws Government is 49.7 times more volatile than Dunham Porategovernment Bond. It trades about -0.23 of its total potential returns per unit of risk. Dunham Porategovernment Bond is currently generating about -0.16 per unit of volatility. If you would invest  1,244  in Dunham Porategovernment Bond on January 19, 2024 and sell it today you would lose (16.00) from holding Dunham Porategovernment Bond or give up 1.29% of portfolio value over 90 days.

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

Dws Government Money  vs.  Dunham Porategovernment Bond

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.

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.

Pair Trading with Dws Government and Dunham Porategovernment

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

The idea behind Dws Government Money 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.