Correlation Between American Express and Dunham Real

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

Diversification Opportunities for American Express and Dunham Real

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between American and Dunham is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Dunham Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Real Estate and American Express 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 American Express are associated (or correlated) with Dunham Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Real Estate has no effect on the direction of American Express i.e., American Express and Dunham Real go up and down completely randomly.

Pair Corralation between American Express and Dunham Real

Considering the 90-day investment horizon American Express is expected to generate 1.3 times less return on investment than Dunham Real. But when comparing it to its historical volatility, American Express is 1.08 times less risky than Dunham Real. It trades about 0.11 of its potential returns per unit of risk. Dunham Real Estate is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,118  in Dunham Real Estate on August 28, 2022 and sell it today you would earn a total of  69.00  from holding Dunham Real Estate or generate 6.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

American Express  vs.  Dunham Real Estate

 Performance (%) 
       Timeline  
American Express 
American Performance
0 of 100
Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, American Express is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

Dunham Real Estate 
Dunham Performance
0 of 100
Over the last 90 days Dunham Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Dunham Price Channel

American Express and Dunham Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and Dunham Real

The main advantage of trading using opposite American Express and Dunham Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Dunham Real 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 Real will offset losses from the drop in Dunham Real's long position.
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The idea behind American Express and Dunham Real Estate 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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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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