Correlation Between James Balanced and Dunham Large

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

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

Diversification Opportunities for James Balanced and Dunham Large

0.67

Correlation Coefficient

James Balanced  Dunham Large

Poor diversification

The 3 months correlation between James and Dunham is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding James Balanced Golden and Dunham Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Large Cap and James Balanced 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 James Balanced Golden are associated (or correlated) with Dunham Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Large Cap has no effect on the direction of James Balanced i.e., James Balanced and Dunham Large go up and down completely randomly.

Pair Corralation between James Balanced and Dunham Large

Assuming the 90 days horizon James Balanced Golden is expected to under-perform the Dunham Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, James Balanced Golden is 1.36 times less risky than Dunham Large. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Dunham Large Cap is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,033  in Dunham Large Cap on September 24, 2024 and sell it today you would lose (24.00) from holding Dunham Large Cap or give up 1.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

James Balanced Golden  vs.  Dunham Large Cap

James Balanced Golden

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dunham Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with James Balanced and Dunham Large

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

The idea behind James Balanced Golden and Dunham Large Cap 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.