Correlation Between Dreyfus New and Health Care
Can any of the company-specific risk be diversified away by investing in both Dreyfus New and Health Care 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 New and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus New Jersey and Health Care Fund, you can compare the effects of market volatilities on Dreyfus New and Health Care 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 New with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus New and Health Care.
Diversification Opportunities for Dreyfus New and Health Care
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dreyfus and Health is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus New Jersey and Health Care Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Fund and Dreyfus New 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 New Jersey are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Fund has no effect on the direction of Dreyfus New i.e., Dreyfus New and Health Care go up and down completely randomly.
Pair Corralation between Dreyfus New and Health Care
Assuming the 90 days horizon Dreyfus New is expected to generate 66.53 times less return on investment than Health Care. But when comparing it to its historical volatility, Dreyfus New Jersey is 55.72 times less risky than Health Care. It trades about 0.05 of its potential returns per unit of risk. Health Care Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,310 in Health Care Fund on November 27, 2024 and sell it today you would earn a total of 7,621 from holding Health Care Fund or generate 230.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus New Jersey vs. Health Care Fund
Performance |
| Timeline |
| Dreyfus New Jersey |
| Health Care Fund |
Dreyfus New and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus New and Health Care
The main advantage of trading using opposite Dreyfus New and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus New position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Dreyfus New vs. Dreyfusstandish Global Fixed | Dreyfus New vs. T Rowe Price | Dreyfus New vs. Rbc Funds Trust | Dreyfus New vs. Doubleline Emerging Markets |
| Health Care vs. Doubleline Global Bond | Health Care vs. T Rowe Price | Health Care vs. Investec Global Franchise | Health Care vs. Qs Global Equity |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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