Correlation Between Dreyfus Natural and Western Asset
Can any of the company-specific risk be diversified away by investing in both Dreyfus Natural and Western Asset 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 Western Asset 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 Western Asset Municipal, you can compare the effects of market volatilities on Dreyfus Natural and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Natural and Western Asset.
Diversification Opportunities for Dreyfus Natural and Western Asset
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dreyfus and Western is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Natural Resources and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Dreyfus Natural i.e., Dreyfus Natural and Western Asset go up and down completely randomly.
Pair Corralation between Dreyfus Natural and Western Asset
Assuming the 90 days horizon Dreyfus Natural Resources is expected to generate 2.84 times more return on investment than Western Asset. However, Dreyfus Natural is 2.84 times more volatile than Western Asset Municipal. It trades about 0.24 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.11 per unit of risk. If you would invest 4,165 in Dreyfus Natural Resources on September 4, 2024 and sell it today you would earn a total of 224.00 from holding Dreyfus Natural Resources or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Natural Resources vs. Western Asset Municipal
Performance |
| Timeline |
| Dreyfus Natural Resources |
| Western Asset Municipal |
Dreyfus Natural and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Natural and Western Asset
The main advantage of trading using opposite Dreyfus Natural and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Natural position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Dreyfus Natural vs. Jennison Natural Resources | Dreyfus Natural vs. Icon Natural Resources | Dreyfus Natural vs. Tortoise Energy Independence | Dreyfus Natural vs. Clearbridge Energy Mlp |
| Western Asset vs. Icon Natural Resources | Western Asset vs. Invesco Energy Fund | Western Asset vs. Dreyfus Natural Resources | Western Asset vs. Gmo Resources |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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