Correlation Between Dreyfus Natural and International Equity
Can any of the company-specific risk be diversified away by investing in both Dreyfus Natural and International Equity 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 International Equity 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 International Equity Index, you can compare the effects of market volatilities on Dreyfus Natural and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Natural and International Equity.
Diversification Opportunities for Dreyfus Natural and International Equity
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dreyfus and International is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Natural Resources and International Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Dreyfus Natural i.e., Dreyfus Natural and International Equity go up and down completely randomly.
Pair Corralation between Dreyfus Natural and International Equity
Assuming the 90 days horizon Dreyfus Natural Resources is expected to under-perform the International Equity. In addition to that, Dreyfus Natural is 3.67 times more volatile than International Equity Index. It trades about -0.19 of its total potential returns per unit of risk. International Equity Index is currently generating about 0.21 per unit of volatility. If you would invest 1,166 in International Equity Index on September 13, 2024 and sell it today you would earn a total of 29.00 from holding International Equity Index or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dreyfus Natural Resources vs. International Equity Index
Performance |
| Timeline |
| Dreyfus Natural Resources |
| International Equity |
Dreyfus Natural and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Natural and International Equity
The main advantage of trading using opposite Dreyfus Natural and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Natural position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.| Dreyfus Natural vs. Rationalpier 88 Convertible | Dreyfus Natural vs. Calamos Dynamic Convertible | Dreyfus Natural vs. Gabelli Convertible And | Dreyfus Natural vs. Advent Claymore Convertible |
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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