Correlation Between VMware and Dunham Monthly

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

Diversification Opportunities for VMware and Dunham Monthly

-0.27
  Correlation Coefficient

Very good diversification

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

Pair Corralation between VMware and Dunham Monthly

Considering the 90-day investment horizon VMware Inc is expected to generate 6.29 times more return on investment than Dunham Monthly. However, VMware is 6.29 times more volatile than Dunham Monthly Distribution. It trades about 0.04 of its potential returns per unit of risk. Dunham Monthly Distribution is currently generating about 0.03 per unit of risk. If you would invest  11,111  in VMware Inc on December 30, 2023 and sell it today you would earn a total of  3,137  from holding VMware Inc or generate 28.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy82.42%
ValuesDaily Returns

VMware Inc  vs.  DUNHAM MONTHLY DISTRIBUTION

 Performance 
       Timeline  
VMware Inc 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days VMware Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, VMware is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Dunham Monthly Distr 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
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.

VMware and Dunham Monthly Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VMware and Dunham Monthly

The main advantage of trading using opposite VMware and Dunham Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware 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 VMware Inc 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.
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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