Correlation Between Dow Jones and Dreyfus Strategic
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Dreyfus Strategic 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 Dow Jones and Dreyfus Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Dreyfus Strategic Value, you can compare the effects of market volatilities on Dow Jones and Dreyfus Strategic 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 Dow Jones with a short position of Dreyfus Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Dreyfus Strategic.
Diversification Opportunities for Dow Jones and Dreyfus Strategic
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Dreyfus is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Dreyfus Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Strategic Value and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Dreyfus Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Strategic Value has no effect on the direction of Dow Jones i.e., Dow Jones and Dreyfus Strategic go up and down completely randomly.
Pair Corralation between Dow Jones and Dreyfus Strategic
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Dreyfus Strategic. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.05 times less risky than Dreyfus Strategic. The index trades about -0.27 of its potential returns per unit of risk. The Dreyfus Strategic Value is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,651 in Dreyfus Strategic Value on November 29, 2024 and sell it today you would lose (18.00) from holding Dreyfus Strategic Value or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Dreyfus Strategic Value
Performance |
| Timeline |
Dow Jones and Dreyfus Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Dreyfus Strategic Value
Pair trading matchups for Dreyfus Strategic
Pair Trading with Dow Jones and Dreyfus Strategic
The main advantage of trading using opposite Dow Jones and Dreyfus Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Dreyfus Strategic 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 Strategic will offset losses from the drop in Dreyfus Strategic's long position.| Dow Jones vs. Starbucks | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Finnair Oyj | Dow Jones vs. Mesa Air Group |
| Dreyfus Strategic vs. Dreyfus High Yield | Dreyfus Strategic vs. Dreyfusthe Boston Pany | Dreyfus Strategic vs. Dreyfus International Bond | Dreyfus Strategic 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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