Correlation Between Dreyfus Government and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Dreyfus Government and Federated Mdt 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 Federated Mdt 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 Federated Mdt Large, you can compare the effects of market volatilities on Dreyfus Government and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Government and Federated Mdt.
Diversification Opportunities for Dreyfus Government and Federated Mdt
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dreyfus and Federated is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Government Cash and Federated Mdt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Large 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Large has no effect on the direction of Dreyfus Government i.e., Dreyfus Government and Federated Mdt go up and down completely randomly.
Pair Corralation between Dreyfus Government and Federated Mdt
Assuming the 90 days horizon Dreyfus Government is expected to generate 5.65 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Dreyfus Government Cash is 1.24 times less risky than Federated Mdt. It trades about 0.03 of its potential returns per unit of risk. Federated Mdt Large is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,239 in Federated Mdt Large on August 31, 2024 and sell it today you would earn a total of 1,280 from holding Federated Mdt Large or generate 57.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.68% |
| Values | Daily Returns |
Dreyfus Government Cash vs. Federated Mdt Large
Performance |
| Timeline |
| Dreyfus Government Cash |
| Federated Mdt Large |
Dreyfus Government and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Government and Federated Mdt
The main advantage of trading using opposite Dreyfus Government and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Government position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt's long position.| Dreyfus Government vs. Qs Large Cap | Dreyfus Government vs. Jhancock Disciplined Value | Dreyfus Government vs. John Hancock Investment | Dreyfus Government vs. Legg Mason Bw |
| Federated Mdt vs. Virtus Seix Government | Federated Mdt vs. Blackrock Government Bond | Federated Mdt vs. Dreyfus Government Cash | Federated Mdt vs. Goldman Sachs Government |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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