Correlation Between Dreyfus International and Dreyfus Research
Can any of the company-specific risk be diversified away by investing in both Dreyfus International and Dreyfus Research 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 International and Dreyfus Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus International Bond and Dreyfus Research Growth, you can compare the effects of market volatilities on Dreyfus International and Dreyfus Research 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 International with a short position of Dreyfus Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus International and Dreyfus Research.
Diversification Opportunities for Dreyfus International and Dreyfus Research
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dreyfus and Dreyfus is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus International Bond and Dreyfus Research Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Research Growth and Dreyfus International 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 International Bond are associated (or correlated) with Dreyfus Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Research Growth has no effect on the direction of Dreyfus International i.e., Dreyfus International and Dreyfus Research go up and down completely randomly.
Pair Corralation between Dreyfus International and Dreyfus Research
Assuming the 90 days horizon Dreyfus International Bond is expected to under-perform the Dreyfus Research. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dreyfus International Bond is 2.61 times less risky than Dreyfus Research. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Dreyfus Research Growth is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,009 in Dreyfus Research Growth on August 28, 2024 and sell it today you would earn a total of 99.00 from holding Dreyfus Research Growth or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dreyfus International Bond vs. Dreyfus Research Growth
Performance |
| Timeline |
| Dreyfus International |
| Dreyfus Research Growth |
Dreyfus International and Dreyfus Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus International and Dreyfus Research
The main advantage of trading using opposite Dreyfus International and Dreyfus Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus International position performs unexpectedly, Dreyfus Research 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 Research will offset losses from the drop in Dreyfus Research's long position.The idea behind Dreyfus International Bond and Dreyfus Research Growth 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.
| Dreyfus Research vs. Dreyfus High Yield | Dreyfus Research vs. Dreyfusthe Boston Pany | Dreyfus Research vs. Dreyfus International Bond | Dreyfus Research vs. Dreyfus International Bond |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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