Correlation Between Dreyfus International and International Stock
Can any of the company-specific risk be diversified away by investing in both Dreyfus International and International Stock 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 International Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus International Stock and International Stock Fund, you can compare the effects of market volatilities on Dreyfus International and International Stock 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 International Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus International and International Stock.
Diversification Opportunities for Dreyfus International and International Stock
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dreyfus and International is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus International Stock and International Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stock 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 Stock are associated (or correlated) with International Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stock has no effect on the direction of Dreyfus International i.e., Dreyfus International and International Stock go up and down completely randomly.
Pair Corralation between Dreyfus International and International Stock
Assuming the 90 days horizon Dreyfus International Stock is expected to generate 0.92 times more return on investment than International Stock. However, Dreyfus International Stock is 1.09 times less risky than International Stock. It trades about 0.03 of its potential returns per unit of risk. International Stock Fund is currently generating about 0.0 per unit of risk. If you would invest 1,916 in Dreyfus International Stock on August 29, 2024 and sell it today you would earn a total of 76.00 from holding Dreyfus International Stock or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus International Stock vs. International Stock Fund
Performance |
| Timeline |
| Dreyfus International |
| International Stock |
Dreyfus International and International Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus International and International Stock
The main advantage of trading using opposite Dreyfus International and International Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus International position performs unexpectedly, International Stock 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 International Stock will offset losses from the drop in International Stock's long position.| Dreyfus International vs. Prudential Health Sciences | Dreyfus International vs. Health Biotchnology Portfolio | Dreyfus International vs. Baron Health Care | Dreyfus International vs. Alger Health Sciences |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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