Correlation Between Dreyfus Municipal and Dreyfus New
Can any of the company-specific risk be diversified away by investing in both Dreyfus Municipal and Dreyfus New 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 New 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 New Jersey, you can compare the effects of market volatilities on Dreyfus Municipal and Dreyfus New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Municipal and Dreyfus New.
Diversification Opportunities for Dreyfus Municipal and Dreyfus New
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dreyfus and Dreyfus is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Municipal Bond and Dreyfus New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus New Jersey 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus New Jersey has no effect on the direction of Dreyfus Municipal i.e., Dreyfus Municipal and Dreyfus New go up and down completely randomly.
Pair Corralation between Dreyfus Municipal and Dreyfus New
Assuming the 90 days horizon Dreyfus Municipal is expected to generate 1.03 times less return on investment than Dreyfus New. But when comparing it to its historical volatility, Dreyfus Municipal Bond is 1.02 times less risky than Dreyfus New. It trades about 0.14 of its potential returns per unit of risk. Dreyfus New Jersey is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,177 in Dreyfus New Jersey on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Dreyfus New Jersey or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Municipal Bond vs. Dreyfus New Jersey
Performance |
| Timeline |
| Dreyfus Municipal Bond |
| Dreyfus New Jersey |
Dreyfus Municipal and Dreyfus New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Municipal and Dreyfus New
The main advantage of trading using opposite Dreyfus Municipal and Dreyfus New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Municipal position performs unexpectedly, Dreyfus New 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 New will offset losses from the drop in Dreyfus New'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 New vs. Dreyfusstandish Global Fixed | Dreyfus New vs. Dreyfusstandish Global Fixed | Dreyfus New vs. Dreyfus High Yield | Dreyfus New vs. Dreyfus High Yield |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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