Correlation Between Growth Fund and Dreyfus Appreciation
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Dreyfus Appreciation 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 Growth Fund and Dreyfus Appreciation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Dreyfus Appreciation Fund, you can compare the effects of market volatilities on Growth Fund and Dreyfus Appreciation 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 Growth Fund with a short position of Dreyfus Appreciation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Dreyfus Appreciation.
Diversification Opportunities for Growth Fund and Dreyfus Appreciation
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and Dreyfus is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Dreyfus Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Appreciation and Growth Fund 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 Growth Fund Of are associated (or correlated) with Dreyfus Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Appreciation has no effect on the direction of Growth Fund i.e., Growth Fund and Dreyfus Appreciation go up and down completely randomly.
Pair Corralation between Growth Fund and Dreyfus Appreciation
Assuming the 90 days horizon Growth Fund Of is expected to generate 1.17 times more return on investment than Dreyfus Appreciation. However, Growth Fund is 1.17 times more volatile than Dreyfus Appreciation Fund. It trades about 0.09 of its potential returns per unit of risk. Dreyfus Appreciation Fund is currently generating about 0.04 per unit of risk. If you would invest 4,731 in Growth Fund Of on October 9, 2024 and sell it today you would earn a total of 2,759 from holding Growth Fund Of or generate 58.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Dreyfus Appreciation Fund
Performance |
| Timeline |
| Growth Fund |
| Dreyfus Appreciation |
Growth Fund and Dreyfus Appreciation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Dreyfus Appreciation
The main advantage of trading using opposite Growth Fund and Dreyfus Appreciation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Dreyfus Appreciation 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 Appreciation will offset losses from the drop in Dreyfus Appreciation's long position.| Growth Fund vs. Franklin Small Cap | Growth Fund vs. Artisan Small Cap | Growth Fund vs. Small Pany Growth | Growth Fund vs. Hunter Small Cap |
| Dreyfus Appreciation vs. Dreyfus Global Equity | Dreyfus Appreciation vs. Dreyfus Institutional Reserves | Dreyfus Appreciation vs. Dynamic Total Return | Dreyfus Appreciation vs. Dynamic Total Return |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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