Correlation Between Dunham Focused and Guidepath(r) Flexible

Can any of the company-specific risk be diversified away by investing in both Dunham Focused and Guidepath(r) Flexible 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 Focused and Guidepath(r) Flexible into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dunham Focused Large and Guidepath Flexible Income, you can compare the effects of market volatilities on Dunham Focused and Guidepath(r) Flexible 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 Focused with a short position of Guidepath(r) Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham Focused and Guidepath(r) Flexible.

Diversification Opportunities for Dunham Focused and Guidepath(r) Flexible

0.66

Correlation Coefficient

Dunham Focused  Guidepath(r) Flexible

Poor diversification

The 3 months correlation between Dunham and Guidepath(r) is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dunham Focused Large and Guidepath Flexible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Flexible Income and Dunham Focused 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 Focused Large are associated (or correlated) with Guidepath(r) Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Flexible Income has no effect on the direction of Dunham Focused i.e., Dunham Focused and Guidepath(r) Flexible go up and down completely randomly.

Pair Corralation between Dunham Focused and Guidepath(r) Flexible

Assuming the 90 days horizon Dunham Focused Large is expected to generate 10.29 times more return on investment than Guidepath(r) Flexible. However, Dunham Focused is 10.29 times more volatile than Guidepath Flexible Income. It trades about 0.38 of its potential returns per unit of risk. Guidepath Flexible Income is currently generating about 0.28 per unit of risk. If you would invest  3,326  in Dunham Focused Large on April 21, 2025 and sell it today you would earn a total of  1,073  from holding Dunham Focused Large or generate 32.26% return on investment over 90 days.

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

Dunham Focused Large  vs.  Guidepath Flexible Income

Dunham Focused Large

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Focused Large are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dunham Focused showed solid returns over the last few months and may actually be approaching a breakup point.

Guidepath Flexible Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Flexible Income are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Guidepath(r) Flexible 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 Focused and Guidepath(r) Flexible

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

The idea behind Dunham Focused Large and Guidepath Flexible Income 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.