Correlation Between Dreyfusstandish Global and American Beacon
Can any of the company-specific risk be diversified away by investing in both Dreyfusstandish Global and American Beacon 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 Dreyfusstandish Global and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfusstandish Global Fixed and American Beacon Bridgeway, you can compare the effects of market volatilities on Dreyfusstandish Global and American Beacon 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 Dreyfusstandish Global with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfusstandish Global and American Beacon.
Diversification Opportunities for Dreyfusstandish Global and American Beacon
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dreyfusstandish and American is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusstandish Global Fixed and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway and Dreyfusstandish Global 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 Dreyfusstandish Global Fixed are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Bridgeway has no effect on the direction of Dreyfusstandish Global i.e., Dreyfusstandish Global and American Beacon go up and down completely randomly.
Pair Corralation between Dreyfusstandish Global and American Beacon
Assuming the 90 days horizon Dreyfusstandish Global Fixed is expected to generate 0.24 times more return on investment than American Beacon. However, Dreyfusstandish Global Fixed is 4.09 times less risky than American Beacon. It trades about 0.46 of its potential returns per unit of risk. American Beacon Bridgeway is currently generating about -0.13 per unit of risk. If you would invest 2,036 in Dreyfusstandish Global Fixed on September 12, 2024 and sell it today you would earn a total of 31.00 from holding Dreyfusstandish Global Fixed or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfusstandish Global Fixed vs. American Beacon Bridgeway
Performance |
| Timeline |
| Dreyfusstandish Global |
| American Beacon Bridgeway |
Dreyfusstandish Global and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfusstandish Global and American Beacon
The main advantage of trading using opposite Dreyfusstandish Global and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfusstandish Global position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.The idea behind Dreyfusstandish Global Fixed and American Beacon Bridgeway pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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