Correlation Between Realty Income and Dunham Monthly

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Can any of the company-specific risk be diversified away by investing in both Realty Income 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 Realty Income and Dunham Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income Corp and Dunham Monthly Distribution, you can compare the effects of market volatilities on Realty Income 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 Realty Income with a short position of Dunham Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Dunham Monthly.

Diversification Opportunities for Realty Income and Dunham Monthly

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Realty and Dunham is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income 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 Realty Income 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 Realty Income 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 Realty Income i.e., Realty Income and Dunham Monthly go up and down completely randomly.

Pair Corralation between Realty Income and Dunham Monthly

Taking into account the 90-day investment horizon Realty Income Corp is expected to generate 2.85 times more return on investment than Dunham Monthly. However, Realty Income is 2.85 times more volatile than Dunham Monthly Distribution. It trades about 0.18 of its potential returns per unit of risk. Dunham Monthly Distribution is currently generating about 0.07 per unit of risk. If you would invest  5,205  in Realty Income Corp on December 29, 2023 and sell it today you would earn a total of  172.00  from holding Realty Income Corp or generate 3.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Realty Income Corp  vs.  DUNHAM MONTHLY DISTRIBUTION

 Performance 
       Timeline  
Realty me Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Realty Income Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Realty Income is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Dunham Monthly Distr 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Monthly Distribution are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Realty Income and Dunham Monthly Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Realty Income and Dunham Monthly

The main advantage of trading using opposite Realty Income and Dunham Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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 Realty Income 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 the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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