Correlation Between Western Asset and Dunham Monthly
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Dunham Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Mortgage and Dunham Monthly Distribution, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Dunham Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Dunham Monthly.
Diversification Opportunities for Western Asset and Dunham Monthly
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Dunham is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Mortgage 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 Western Asset 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 Western Asset Mortgage 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 Western Asset i.e., Western Asset and Dunham Monthly go up and down completely randomly.
Pair Corralation between Western Asset and Dunham Monthly
Considering the 90-day investment horizon Western Asset Mortgage is expected to generate 3.19 times more return on investment than Dunham Monthly. However, Western Asset is 3.19 times more volatile than Dunham Monthly Distribution. It trades about 0.03 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 1,154 in Western Asset Mortgage on August 30, 2025 and sell it today you would earn a total of 8.00 from holding Western Asset Mortgage or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Western Asset Mortgage vs. Dunham Monthly Distribution
Performance |
| Timeline |
| Western Asset Mortgage |
| Dunham Monthly Distr |
Western Asset and Dunham Monthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Dunham Monthly
The main advantage of trading using opposite Western Asset and Dunham Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Eagle Growth Income | Western Asset vs. Auer Growth Fund | Western Asset vs. Stringer Growth Fund | Western Asset vs. Qs Growth Fund |
| Dunham Monthly vs. Eagle Growth Income | Dunham Monthly vs. Alpskotak India Growth | Dunham Monthly vs. Qs Moderate Growth | Dunham Monthly vs. Stringer Growth Fund |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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