Correlation Between Vanguard High and Dunham Monthly

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

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

Diversification Opportunities for Vanguard High and Dunham Monthly

0.5

Correlation Coefficient

Vanguard High  Dunham Monthly

Very weak diversification

The 3 months correlation between Vanguard and Dunham is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Dividend 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 Vanguard High 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 Vanguard High Dividend 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 Vanguard High i.e., Vanguard High and Dunham Monthly go up and down completely randomly.

Pair Corralation between Vanguard High and Dunham Monthly

Considering the 90-day investment horizon Vanguard High Dividend is expected to generate 2.98 times more return on investment than Dunham Monthly. However, Vanguard High is 2.98 times more volatile than Dunham Monthly Distribution. It trades about 0.08 of its potential returns per unit of risk. Dunham Monthly Distribution is currently generating about 0.04 per unit of risk. If you would invest  10,768  in Vanguard High Dividend on January 24, 2024 and sell it today you would earn a total of  998.00  from holding Vanguard High Dividend or generate 9.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.47%
Values	Daily Returns

Vanguard High Dividend  vs.  Dunham Monthly Distribution

Vanguard High Dividend

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard High Dividend are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard High 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

0 of 100

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.

Pair Trading with Vanguard High and Dunham Monthly

The main advantage of trading using opposite Vanguard High and Dunham Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High 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 Vanguard High Dividend 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.