Correlation Between New Perspective and Dreyfus Technology
Can any of the company-specific risk be diversified away by investing in both New Perspective and Dreyfus Technology 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 New Perspective and Dreyfus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Perspective Fund and Dreyfus Technology Growth, you can compare the effects of market volatilities on New Perspective and Dreyfus Technology 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 New Perspective with a short position of Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Dreyfus Technology.
Diversification Opportunities for New Perspective and Dreyfus Technology
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Dreyfus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Dreyfus Technology Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Technology Growth and New Perspective 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 New Perspective Fund are associated (or correlated) with Dreyfus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Technology Growth has no effect on the direction of New Perspective i.e., New Perspective and Dreyfus Technology go up and down completely randomly.
Pair Corralation between New Perspective and Dreyfus Technology
Assuming the 90 days horizon New Perspective Fund is expected to generate 0.59 times more return on investment than Dreyfus Technology. However, New Perspective Fund is 1.69 times less risky than Dreyfus Technology. It trades about -0.07 of its potential returns per unit of risk. Dreyfus Technology Growth is currently generating about -0.12 per unit of risk. If you would invest 6,168 in New Perspective Fund on January 3, 2025 and sell it today you would lose (145.00) from holding New Perspective Fund or give up 2.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
New Perspective Fund vs. Dreyfus Technology Growth
Performance |
| Timeline |
| New Perspective |
| Dreyfus Technology Growth |
New Perspective and Dreyfus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Dreyfus Technology
The main advantage of trading using opposite New Perspective and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Dreyfus Technology 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 Technology will offset losses from the drop in Dreyfus Technology's long position.| New Perspective vs. American Funds Growth | New Perspective vs. American Funds Growth | New Perspective vs. American Funds Balanced | New Perspective vs. American Funds Income |
| Dreyfus Technology vs. Skycorp Solar Group | Dreyfus Technology vs. Veea Inc | Dreyfus Technology vs. Datavault AI | Dreyfus Technology vs. VivoPower International PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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