Correlation Between Dreyfus Municipal and Dreyfus Short
Can any of the company-specific risk be diversified away by investing in both Dreyfus Municipal and Dreyfus Short 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 Municipal and Dreyfus Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Municipal Bond and Dreyfus Short Intermediate, you can compare the effects of market volatilities on Dreyfus Municipal and Dreyfus Short 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 Municipal with a short position of Dreyfus Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Municipal and Dreyfus Short.
Diversification Opportunities for Dreyfus Municipal and Dreyfus Short
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dreyfus and Dreyfus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Municipal Bond and Dreyfus Short Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Short Interm and Dreyfus Municipal 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 Municipal Bond are associated (or correlated) with Dreyfus Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Short Interm has no effect on the direction of Dreyfus Municipal i.e., Dreyfus Municipal and Dreyfus Short go up and down completely randomly.
Pair Corralation between Dreyfus Municipal and Dreyfus Short
Assuming the 90 days horizon Dreyfus Municipal Bond is expected to generate 3.72 times more return on investment than Dreyfus Short. However, Dreyfus Municipal is 3.72 times more volatile than Dreyfus Short Intermediate. It trades about 0.2 of its potential returns per unit of risk. Dreyfus Short Intermediate is currently generating about 0.23 per unit of risk. If you would invest 1,210 in Dreyfus Municipal Bond on December 1, 2024 and sell it today you would earn a total of 12.00 from holding Dreyfus Municipal Bond or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Municipal Bond vs. Dreyfus Short Intermediate
Performance |
| Timeline |
| Dreyfus Municipal Bond |
| Dreyfus Short Interm |
Dreyfus Municipal and Dreyfus Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Municipal and Dreyfus Short
The main advantage of trading using opposite Dreyfus Municipal and Dreyfus Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Municipal position performs unexpectedly, Dreyfus Short 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 Short will offset losses from the drop in Dreyfus Short's long position.| Dreyfus Municipal vs. Dreyfusstandish Global Fixed | Dreyfus Municipal vs. Dreyfusstandish Global Fixed | Dreyfus Municipal vs. Dreyfus High Yield | Dreyfus Municipal vs. Dreyfus High Yield |
| Dreyfus Short vs. Dreyfus Intermediate Municipal | Dreyfus Short vs. Dreyfus Short Term Income | Dreyfus Short vs. Dreyfus Gnma Fund | Dreyfus Short vs. Fidelity Limited Term |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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