Correlation Between First American and Dunham Monthly

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

By analyzing existing cross correlation between First American Investment and Dunham Monthly Distribution, you can compare the effects of market volatilities on First American 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 First American with a short position of Dunham Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Dunham Monthly.

Diversification Opportunities for First American and Dunham Monthly

-0.82

Correlation Coefficient

First American  Dunham Monthly

Pay attention - limited upside

The 3 months correlation between First and Dunham is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding First American Investment 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 First American 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 First American Investment 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 First American i.e., First American and Dunham Monthly go up and down completely randomly.

Pair Corralation between First American and Dunham Monthly

Assuming the 90 days horizon First American Investment is expected to under-perform the Dunham Monthly. In addition to that, First American is 13.47 times more volatile than Dunham Monthly Distribution. It trades about -0.02 of its total potential returns per unit of risk. Dunham Monthly Distribution is currently generating about 0.28 per unit of volatility. If you would invest  2,873  in Dunham Monthly Distribution on August 28, 2025 and sell it today you would earn a total of  43.00  from holding Dunham Monthly Distribution or generate 1.5% return on investment over 90 days.

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

First American Investment  vs.  Dunham Monthly Distribution

First American Investment

Risk-Adjusted Performance

Weakest

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

Dunham Monthly Distr

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Monthly Distribution are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Dunham Monthly is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First American and Dunham Monthly

The main advantage of trading using opposite First American and Dunham Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American 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.

The idea behind First American Investment and Dunham Monthly Distribution 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.