Correlation Between Microsoft Corp and Dunham Monthly

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

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

Diversification Opportunities for Microsoft Corp and Dunham Monthly

-0.65
  Correlation Coefficient
Microsoft Corp
Dunham Monthly Distr

Excellent diversification

The 3 months correlation between Microsoft and Dunham is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and Dunham Monthly Distribution in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Dunham Monthly Distr and Microsoft Corp 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 Microsoft Corp are associated (or correlated) with Dunham Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Monthly Distr has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Dunham Monthly go up and down completely randomly.

Pair Corralation between Microsoft Corp and Dunham Monthly

Given the investment horizon of 90 days Microsoft Corp is expected to generate 5.48 times more return on investment than Dunham Monthly. However, Microsoft Corp is 5.48 times more volatile than Dunham Monthly Distribution. It trades about 0.11 of its potential returns per unit of risk. Dunham Monthly Distribution is currently generating about 0.01 per unit of risk. If you would invest  20,625  in Microsoft Corp on September 2, 2021 and sell it today you would earn a total of  12,962  from holding Microsoft Corp or generate 62.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Microsoft Corp  vs.  Dunham Monthly Distribution

 Performance (%) 
      Timeline 
Microsoft Corp 
Microsoft Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Microsoft Corp may actually be approaching a critical reversion point that can send shares even higher in January 2022.

Microsoft Price Channel

Dunham Monthly Distr 
Dunham Performance
0 of 100
Over the last 90 days Dunham Monthly Distribution has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Dunham Monthly is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Microsoft Corp and Dunham Monthly Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Microsoft Corp and Dunham Monthly

The main advantage of trading using opposite Microsoft Corp and Dunham Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Dunham Monthly 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 Monthly will offset losses from the drop in Dunham Monthly's long position.
The idea behind Microsoft Corp and Dunham Monthly Distribution 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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