Correlation Between Ishares Municipal and Dreyfus High
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Dreyfus High 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 Ishares Municipal and Dreyfus High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Dreyfus High Yield, you can compare the effects of market volatilities on Ishares Municipal and Dreyfus High 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 Ishares Municipal with a short position of Dreyfus High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Dreyfus High.
Diversification Opportunities for Ishares Municipal and Dreyfus High
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ishares and Dreyfus is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Dreyfus High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus High Yield and Ishares Municipal 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 Ishares Municipal Bond are associated (or correlated) with Dreyfus High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus High Yield has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Dreyfus High go up and down completely randomly.
Pair Corralation between Ishares Municipal and Dreyfus High
Assuming the 90 days horizon Ishares Municipal is expected to generate 1.2 times less return on investment than Dreyfus High. But when comparing it to its historical volatility, Ishares Municipal Bond is 1.47 times less risky than Dreyfus High. It trades about 0.22 of its potential returns per unit of risk. Dreyfus High Yield is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,098 in Dreyfus High Yield on September 2, 2024 and sell it today you would earn a total of 19.00 from holding Dreyfus High Yield or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Dreyfus High Yield
Performance |
| Timeline |
| Ishares Municipal Bond |
| Dreyfus High Yield |
Ishares Municipal and Dreyfus High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Dreyfus High
The main advantage of trading using opposite Ishares Municipal and Dreyfus High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Dreyfus High 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 High will offset losses from the drop in Dreyfus High's long position.| Ishares Municipal vs. Calvert Developed Market | Ishares Municipal vs. Siit Emerging Markets | Ishares Municipal vs. Locorr Market Trend | Ishares Municipal vs. Ab All Market |
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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 the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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