Correlation Between Dreyfus High and Dreyfus Yield
Can any of the company-specific risk be diversified away by investing in both Dreyfus High and Dreyfus Yield 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 Yield 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 Yield Enhancement, you can compare the effects of market volatilities on Dreyfus High and Dreyfus Yield 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 Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus High and Dreyfus Yield.
Diversification Opportunities for Dreyfus High and Dreyfus Yield
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dreyfus and Dreyfus is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus High Yield and Dreyfus Yield Enhancement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Yield Enhancement 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 Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Yield Enhancement has no effect on the direction of Dreyfus High i.e., Dreyfus High and Dreyfus Yield go up and down completely randomly.
Pair Corralation between Dreyfus High and Dreyfus Yield
Assuming the 90 days horizon Dreyfus High Yield is expected to generate 2.42 times more return on investment than Dreyfus Yield. However, Dreyfus High is 2.42 times more volatile than Dreyfus Yield Enhancement. It trades about 0.11 of its potential returns per unit of risk. Dreyfus Yield Enhancement is currently generating about 0.25 per unit of risk. If you would invest 1,070 in Dreyfus High Yield on September 3, 2024 and sell it today you would earn a total of 50.00 from holding Dreyfus High Yield or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus High Yield vs. Dreyfus Yield Enhancement
Performance |
| Timeline |
| Dreyfus High Yield |
| Dreyfus Yield Enhancement |
Dreyfus High and Dreyfus Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus High and Dreyfus Yield
The main advantage of trading using opposite Dreyfus High and Dreyfus Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus High position performs unexpectedly, Dreyfus Yield 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 Yield will offset losses from the drop in Dreyfus Yield's long position.| Dreyfus High vs. Blackrock Sm Cap | Dreyfus High vs. Tax Managed Mid Small | Dreyfus High vs. Wasatch Small Cap | Dreyfus High vs. Davenport Small Cap |
| Dreyfus Yield vs. Prudential Government Income | Dreyfus Yield vs. Aig Government Money | Dreyfus Yield vs. Us Government Securities | Dreyfus Yield vs. Us Government Securities |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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