Correlation Between Dreyfus High and Dreyfus Municipal
Can any of the company-specific risk be diversified away by investing in both Dreyfus High and Dreyfus Municipal 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 High and Dreyfus Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus High Yield and Dreyfus Municipal Bond, you can compare the effects of market volatilities on Dreyfus High and Dreyfus Municipal 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 High with a short position of Dreyfus Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus High and Dreyfus Municipal.
Diversification Opportunities for Dreyfus High and Dreyfus Municipal
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dreyfus and Dreyfus is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus High Yield and Dreyfus Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipal Bond and Dreyfus High 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 High Yield are associated (or correlated) with Dreyfus Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipal Bond has no effect on the direction of Dreyfus High i.e., Dreyfus High and Dreyfus Municipal go up and down completely randomly.
Pair Corralation between Dreyfus High and Dreyfus Municipal
Assuming the 90 days horizon Dreyfus High Yield is expected to generate 1.4 times more return on investment than Dreyfus Municipal. However, Dreyfus High is 1.4 times more volatile than Dreyfus Municipal Bond. It trades about 0.12 of its potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about 0.14 per unit of risk. If you would invest 1,055 in Dreyfus High Yield on August 28, 2024 and sell it today you would earn a total of 52.00 from holding Dreyfus High Yield or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dreyfus High Yield vs. Dreyfus Municipal Bond
Performance |
| Timeline |
| Dreyfus High Yield |
| Dreyfus Municipal Bond |
Dreyfus High and Dreyfus Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus High and Dreyfus Municipal
The main advantage of trading using opposite Dreyfus High and Dreyfus Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus High position performs unexpectedly, Dreyfus Municipal 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 Municipal will offset losses from the drop in Dreyfus Municipal's long position.| Dreyfus High vs. Dreyfusstandish Global Fixed | Dreyfus High vs. Dreyfusstandish Global Fixed | Dreyfus High vs. Dreyfus New Jersey | Dreyfus High vs. Dreyfus International Bond |
| Dreyfus Municipal vs. Dreyfusstandish Global Fixed | Dreyfus Municipal vs. Dreyfusstandish Global Fixed | Dreyfus Municipal vs. Dreyfus High Yield | Dreyfus Municipal vs. Dreyfus High Yield |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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