Correlation Between Dreyfus Bond and Dreyfus Midcap
Can any of the company-specific risk be diversified away by investing in both Dreyfus Bond and Dreyfus Midcap 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 Midcap 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 Midcap Index, you can compare the effects of market volatilities on Dreyfus Bond and Dreyfus Midcap 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 Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Bond and Dreyfus Midcap.
Diversification Opportunities for Dreyfus Bond and Dreyfus Midcap
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dreyfus and Dreyfus is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Bond Market and Dreyfus Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Midcap Index 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 Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Midcap Index has no effect on the direction of Dreyfus Bond i.e., Dreyfus Bond and Dreyfus Midcap go up and down completely randomly.
Pair Corralation between Dreyfus Bond and Dreyfus Midcap
Assuming the 90 days horizon Dreyfus Bond is expected to generate 13.17 times less return on investment than Dreyfus Midcap. But when comparing it to its historical volatility, Dreyfus Bond Market is 3.18 times less risky than Dreyfus Midcap. It trades about 0.08 of its potential returns per unit of risk. Dreyfus Midcap Index is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,164 in Dreyfus Midcap Index on September 1, 2024 and sell it today you would earn a total of 277.00 from holding Dreyfus Midcap Index or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dreyfus Bond Market vs. Dreyfus Midcap Index
Performance |
| Timeline |
| Dreyfus Bond Market |
| Dreyfus Midcap Index |
Dreyfus Bond and Dreyfus Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Bond and Dreyfus Midcap
The main advantage of trading using opposite Dreyfus Bond and Dreyfus Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Bond position performs unexpectedly, Dreyfus Midcap 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 Midcap will offset losses from the drop in Dreyfus Midcap's long position.| Dreyfus Bond vs. Dreyfus International Stock | Dreyfus Bond vs. Dreyfus Smallcap Stock | Dreyfus Bond vs. Dreyfus Midcap Index | Dreyfus Bond vs. Dreyfus Sp 500 |
| Dreyfus Midcap vs. Dreyfus Smallcap Stock | Dreyfus Midcap vs. Dreyfus Sp 500 | Dreyfus Midcap vs. Dreyfus International Stock | Dreyfus Midcap vs. Dreyfus Institutional Sp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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