Correlation Between Dreyfus Active and Dreyfus Midcap
Can any of the company-specific risk be diversified away by investing in both Dreyfus Active and Dreyfus Midcap 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 Active and Dreyfus Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Active Midcap and Dreyfus Midcap Index, you can compare the effects of market volatilities on Dreyfus Active and Dreyfus Midcap 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 Active with a short position of Dreyfus Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Active and Dreyfus Midcap.
Diversification Opportunities for Dreyfus Active and Dreyfus Midcap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dreyfus and Dreyfus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Active Midcap and Dreyfus Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Midcap Index and Dreyfus Active 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 Active Midcap are associated (or correlated) with Dreyfus Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Midcap Index has no effect on the direction of Dreyfus Active i.e., Dreyfus Active and Dreyfus Midcap go up and down completely randomly.
Pair Corralation between Dreyfus Active and Dreyfus Midcap
Assuming the 90 days horizon Dreyfus Active Midcap is expected to generate 0.83 times more return on investment than Dreyfus Midcap. However, Dreyfus Active Midcap is 1.21 times less risky than Dreyfus Midcap. It trades about 0.1 of its potential returns per unit of risk. Dreyfus Midcap Index is currently generating about 0.06 per unit of risk. If you would invest 5,264 in Dreyfus Active Midcap on August 29, 2024 and sell it today you would earn a total of 1,567 from holding Dreyfus Active Midcap or generate 29.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Active Midcap vs. Dreyfus Midcap Index
Performance |
| Timeline |
| Dreyfus Active Midcap |
| Dreyfus Midcap Index |
Dreyfus Active and Dreyfus Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Active and Dreyfus Midcap
The main advantage of trading using opposite Dreyfus Active and Dreyfus Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Active position performs unexpectedly, Dreyfus Midcap 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 Midcap will offset losses from the drop in Dreyfus Midcap's long position.| Dreyfus Active vs. Kinetics Global Fund | Dreyfus Active vs. T Rowe Price | Dreyfus Active vs. Barings Global Floating | Dreyfus Active vs. Dreyfusstandish Global Fixed |
| Dreyfus Midcap vs. Dreyfus Smallcap Stock | Dreyfus Midcap vs. Dreyfus Sp 500 | Dreyfus Midcap vs. Dreyfus International Stock | Dreyfus Midcap vs. Dreyfus Institutional Sp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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