Correlation Between Dreyfus Bond and Dreyfus Smallcap
Can any of the company-specific risk be diversified away by investing in both Dreyfus Bond and Dreyfus Smallcap 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 Dreyfus Bond and Dreyfus Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Bond Market and Dreyfus Smallcap Stock, you can compare the effects of market volatilities on Dreyfus Bond and Dreyfus Smallcap 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 Dreyfus Bond with a short position of Dreyfus Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Bond and Dreyfus Smallcap.
Diversification Opportunities for Dreyfus Bond and Dreyfus Smallcap
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DREYFUS and Dreyfus is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Bond Market and Dreyfus Smallcap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Smallcap Stock and Dreyfus Bond 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 Dreyfus Bond Market are associated (or correlated) with Dreyfus Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Smallcap Stock has no effect on the direction of Dreyfus Bond i.e., Dreyfus Bond and Dreyfus Smallcap go up and down completely randomly.
Pair Corralation between Dreyfus Bond and Dreyfus Smallcap
Assuming the 90 days horizon Dreyfus Bond is expected to generate 2.54 times less return on investment than Dreyfus Smallcap. But when comparing it to its historical volatility, Dreyfus Bond Market is 3.39 times less risky than Dreyfus Smallcap. It trades about 0.05 of its potential returns per unit of risk. Dreyfus Smallcap Stock is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,666 in Dreyfus Smallcap Stock on August 29, 2024 and sell it today you would earn a total of 377.00 from holding Dreyfus Smallcap Stock or generate 14.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Bond Market vs. Dreyfus Smallcap Stock
Performance |
| Timeline |
| Dreyfus Bond Market |
| Dreyfus Smallcap Stock |
Dreyfus Bond and Dreyfus Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Bond and Dreyfus Smallcap
The main advantage of trading using opposite Dreyfus Bond and Dreyfus Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Bond position performs unexpectedly, Dreyfus Smallcap 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 Smallcap will offset losses from the drop in Dreyfus Smallcap's long position.| Dreyfus Bond vs. Sterling Capital Stratton | Dreyfus Bond vs. T Rowe Price | Dreyfus Bond vs. Pender Real Estate | Dreyfus Bond vs. American Century Global |
| Dreyfus Smallcap vs. Vanguard Small Cap Index | Dreyfus Smallcap vs. Vanguard Small Cap Index | Dreyfus Smallcap vs. Vanguard Small Cap Index | Dreyfus Smallcap vs. Vanguard Small Cap Index |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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