Correlation Between Dreyfus Natural and Nationwide Small

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Can any of the company-specific risk be diversified away by investing in both Dreyfus Natural and Nationwide Small 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 Natural and Nationwide Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Natural Resources and Nationwide Small Cap, you can compare the effects of market volatilities on Dreyfus Natural and Nationwide Small 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 Natural with a short position of Nationwide Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Natural and Nationwide Small.

Diversification Opportunities for Dreyfus Natural and Nationwide Small

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Dreyfus and Nationwide is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Natural Resources and Nationwide Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Small Cap and Dreyfus Natural 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 Natural Resources are associated (or correlated) with Nationwide Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Small Cap has no effect on the direction of Dreyfus Natural i.e., Dreyfus Natural and Nationwide Small go up and down completely randomly.

Pair Corralation between Dreyfus Natural and Nationwide Small

Assuming the 90 days horizon Dreyfus Natural Resources is expected to under-perform the Nationwide Small. In addition to that, Dreyfus Natural is 1.13 times more volatile than Nationwide Small Cap. It trades about -0.01 of its total potential returns per unit of risk. Nationwide Small Cap is currently generating about 0.06 per unit of volatility. If you would invest  971.00  in Nationwide Small Cap on September 14, 2024 and sell it today you would earn a total of  374.00  from holding Nationwide Small Cap or generate 38.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Dreyfus Natural Resources  vs.  Nationwide Small Cap

 Performance 
       Timeline  
Dreyfus Natural Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dreyfus Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Dreyfus Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Nationwide Small Cap 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Small Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Nationwide Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dreyfus Natural and Nationwide Small Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dreyfus Natural and Nationwide Small

The main advantage of trading using opposite Dreyfus Natural and Nationwide Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Natural position performs unexpectedly, Nationwide Small 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 Nationwide Small will offset losses from the drop in Nationwide Small's long position.
The idea behind Dreyfus Natural Resources and Nationwide Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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