Correlation Between Dunham Small and Brookfield Global

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

By analyzing existing cross correlation between Dunham Small Cap and Brookfield Global Listed, you can compare the effects of market volatilities on Dunham Small and Brookfield Global 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 Dunham Small with a short position of Brookfield Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Small and Brookfield Global.

Diversification Opportunities for Dunham Small and Brookfield Global

-0.45

Correlation Coefficient

Dunham Small  Brookfield Global

Very good diversification

The 3 months correlation between Dunham and Brookfield is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Small Cap and Brookfield Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Global Listed and Dunham Small 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 Dunham Small Cap are associated (or correlated) with Brookfield Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Global Listed has no effect on the direction of Dunham Small i.e., Dunham Small and Brookfield Global go up and down completely randomly.

Pair Corralation between Dunham Small and Brookfield Global

Assuming the 90 days horizon Dunham Small Cap is expected to generate 1.57 times more return on investment than Brookfield Global. However, Dunham Small is 1.57 times more volatile than Brookfield Global Listed. It trades about 0.19 of its potential returns per unit of risk. Brookfield Global Listed is currently generating about -0.02 per unit of risk. If you would invest  1,106  in Dunham Small Cap on September 4, 2024 and sell it today you would earn a total of  157.00  from holding Dunham Small Cap or generate 14.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dunham Small Cap  vs.  Brookfield Global Listed

Dunham Small Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Small Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dunham Small showed solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Global Listed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dunham Small and Brookfield Global

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

The idea behind Dunham Small Cap and Brookfield Global Listed 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.