Correlation Between Dreyfus Government and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Dreyfus Government and Mid Cap 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 Government and Mid Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Government Cash and Mid Cap Value, you can compare the effects of market volatilities on Dreyfus Government and Mid Cap 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 Government with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Government and Mid Cap.
Diversification Opportunities for Dreyfus Government and Mid Cap
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dreyfus and Mid is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Government Cash and Mid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Value and Dreyfus Government 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 Government Cash are associated (or correlated) with Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Value has no effect on the direction of Dreyfus Government i.e., Dreyfus Government and Mid Cap go up and down completely randomly.
Pair Corralation between Dreyfus Government and Mid Cap
Assuming the 90 days horizon Dreyfus Government is expected to generate 2.5 times less return on investment than Mid Cap. But when comparing it to its historical volatility, Dreyfus Government Cash is 2.75 times less risky than Mid Cap. It trades about 0.07 of its potential returns per unit of risk. Mid Cap Value is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,496 in Mid Cap Value on September 12, 2024 and sell it today you would earn a total of 238.00 from holding Mid Cap Value or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Dreyfus Government Cash vs. Mid Cap Value
Performance |
| Timeline |
| Dreyfus Government Cash |
| Mid Cap Value |
Dreyfus Government and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Government and Mid Cap
The main advantage of trading using opposite Dreyfus Government and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Government position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap's long position.| Dreyfus Government vs. Vanguard Total Stock | Dreyfus Government vs. Vanguard 500 Index | Dreyfus Government vs. Vanguard Total Stock | Dreyfus Government vs. Vanguard Total Stock |
| Mid Cap vs. Goldman Sachs Government | Mid Cap vs. Virtus Seix Government | Mid Cap vs. Dreyfus Government Cash | Mid Cap vs. Dws Government Money |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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