Correlation Between American Mutual and Dreyfus Equity
Can any of the company-specific risk be diversified away by investing in both American Mutual and Dreyfus Equity 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 Mutual and Dreyfus Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Mutual Fund and Dreyfus Equity Income, you can compare the effects of market volatilities on American Mutual and Dreyfus Equity 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 Mutual with a short position of Dreyfus Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Dreyfus Equity.
Diversification Opportunities for American Mutual and Dreyfus Equity
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Dreyfus is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Dreyfus Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Equity Income and American Mutual 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 Mutual Fund are associated (or correlated) with Dreyfus Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Equity Income has no effect on the direction of American Mutual i.e., American Mutual and Dreyfus Equity go up and down completely randomly.
Pair Corralation between American Mutual and Dreyfus Equity
Assuming the 90 days horizon American Mutual is expected to generate 1.18 times less return on investment than Dreyfus Equity. But when comparing it to its historical volatility, American Mutual Fund is 1.26 times less risky than Dreyfus Equity. It trades about 0.16 of its potential returns per unit of risk. Dreyfus Equity Income is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,505 in Dreyfus Equity Income on September 2, 2024 and sell it today you would earn a total of 759.00 from holding Dreyfus Equity Income or generate 30.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Dreyfus Equity Income
Performance |
| Timeline |
| American Mutual |
| Dreyfus Equity Income |
American Mutual and Dreyfus Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Dreyfus Equity
The main advantage of trading using opposite American Mutual and Dreyfus Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Dreyfus Equity 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 Dreyfus Equity will offset losses from the drop in Dreyfus Equity's long position.| American Mutual vs. California Bond Fund | American Mutual vs. Bbh Intermediate Municipal | American Mutual vs. Ultra Short Fixed Income | American Mutual vs. Ambrus Core Bond |
| Dreyfus Equity vs. Dreyfus Institutional Reserves | Dreyfus Equity vs. Legg Mason Partners | Dreyfus Equity vs. Prudential Government Money | Dreyfus Equity vs. Chestnut Street Exchange |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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