Correlation Between Dreyfus Smallcap and Dreyfus Opportunistic
Can any of the company-specific risk be diversified away by investing in both Dreyfus Smallcap and Dreyfus Opportunistic 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 Smallcap and Dreyfus Opportunistic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Smallcap Stock and Dreyfus Opportunistic Midcap, you can compare the effects of market volatilities on Dreyfus Smallcap and Dreyfus Opportunistic 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 Smallcap with a short position of Dreyfus Opportunistic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Smallcap and Dreyfus Opportunistic.
Diversification Opportunities for Dreyfus Smallcap and Dreyfus Opportunistic
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dreyfus and Dreyfus is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Smallcap Stock and Dreyfus Opportunistic Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Opportunistic and Dreyfus Smallcap 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 Smallcap Stock are associated (or correlated) with Dreyfus Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Opportunistic has no effect on the direction of Dreyfus Smallcap i.e., Dreyfus Smallcap and Dreyfus Opportunistic go up and down completely randomly.
Pair Corralation between Dreyfus Smallcap and Dreyfus Opportunistic
Assuming the 90 days horizon Dreyfus Smallcap Stock is expected to generate 1.55 times more return on investment than Dreyfus Opportunistic. However, Dreyfus Smallcap is 1.55 times more volatile than Dreyfus Opportunistic Midcap. It trades about 0.09 of its potential returns per unit of risk. Dreyfus Opportunistic Midcap is currently generating about 0.1 per unit of risk. If you would invest 2,628 in Dreyfus Smallcap Stock on August 29, 2024 and sell it today you would earn a total of 415.00 from holding Dreyfus Smallcap Stock or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Smallcap Stock vs. Dreyfus Opportunistic Midcap
Performance |
| Timeline |
| Dreyfus Smallcap Stock |
| Dreyfus Opportunistic |
Dreyfus Smallcap and Dreyfus Opportunistic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Smallcap and Dreyfus Opportunistic
The main advantage of trading using opposite Dreyfus Smallcap and Dreyfus Opportunistic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Smallcap position performs unexpectedly, Dreyfus Opportunistic 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 Opportunistic will offset losses from the drop in Dreyfus Opportunistic's long position.| Dreyfus Smallcap vs. Vanguard Small Cap Index | Dreyfus Smallcap vs. Vanguard Small Cap Index | Dreyfus Smallcap vs. Vanguard Small Cap Index | Dreyfus Smallcap vs. Vanguard Small Cap Index |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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