Correlation Between Dreyfus High and Dreyfus Short
Can any of the company-specific risk be diversified away by investing in both Dreyfus High and Dreyfus Short 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 Short 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 Short Intermediate, you can compare the effects of market volatilities on Dreyfus High and Dreyfus Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus High and Dreyfus Short.
Diversification Opportunities for Dreyfus High and Dreyfus Short
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dreyfus and Dreyfus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus High Yield and Dreyfus Short Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Short Interm 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Short Interm has no effect on the direction of Dreyfus High i.e., Dreyfus High and Dreyfus Short go up and down completely randomly.
Pair Corralation between Dreyfus High and Dreyfus Short
Assuming the 90 days horizon Dreyfus High Yield is expected to generate 4.63 times more return on investment than Dreyfus Short. However, Dreyfus High is 4.63 times more volatile than Dreyfus Short Intermediate. It trades about 0.08 of its potential returns per unit of risk. Dreyfus Short Intermediate is currently generating about 0.18 per unit of risk. If you would invest 1,004 in Dreyfus High Yield on September 1, 2024 and sell it today you would earn a total of 115.00 from holding Dreyfus High Yield or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus High Yield vs. Dreyfus Short Intermediate
Performance |
| Timeline |
| Dreyfus High Yield |
| Dreyfus Short Interm |
Dreyfus High and Dreyfus Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus High and Dreyfus Short
The main advantage of trading using opposite Dreyfus High and Dreyfus Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus High position performs unexpectedly, Dreyfus Short 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 Short will offset losses from the drop in Dreyfus Short's long position.| Dreyfus High vs. Queens Road Small | Dreyfus High vs. Heartland Value Plus | Dreyfus High vs. Lord Abbett Small | Dreyfus High vs. Vanguard Small Cap Value |
| Dreyfus Short vs. International Investors Gold | Dreyfus Short vs. Franklin Gold Precious | Dreyfus Short vs. Gabelli Gold Fund | Dreyfus Short vs. Short Precious Metals |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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