Correlation Between Dreyfus New and Small Company
Can any of the company-specific risk be diversified away by investing in both Dreyfus New and Small Company 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 Small Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus New York and Small Pany Growth, you can compare the effects of market volatilities on Dreyfus New and Small Company 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 Small Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus New and Small Company.
Diversification Opportunities for Dreyfus New and Small Company
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dreyfus and Small is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus New York and Small Pany Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Growth 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 York are associated (or correlated) with Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Growth has no effect on the direction of Dreyfus New i.e., Dreyfus New and Small Company go up and down completely randomly.
Pair Corralation between Dreyfus New and Small Company
Assuming the 90 days horizon Dreyfus New is expected to generate 6.49 times less return on investment than Small Company. But when comparing it to its historical volatility, Dreyfus New York is 9.13 times less risky than Small Company. It trades about 0.09 of its potential returns per unit of risk. Small Pany Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,122 in Small Pany Growth on September 4, 2024 and sell it today you would earn a total of 547.00 from holding Small Pany Growth or generate 48.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Dreyfus New York vs. Small Pany Growth
Performance |
| Timeline |
| Dreyfus New York |
| Small Pany Growth |
Dreyfus New and Small Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus New and Small Company
The main advantage of trading using opposite Dreyfus New and Small Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus New position performs unexpectedly, Small Company 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 Small Company will offset losses from the drop in Small Company's long position.| Dreyfus New vs. Transamerica Asset Allocation | Dreyfus New vs. T Rowe Price | Dreyfus New vs. Franklin Lifesmart 2050 | Dreyfus New vs. T Rowe Price |
| Small Company vs. Mid Cap Growth | Small Company vs. Growth Portfolio Class | Small Company vs. Morgan Stanley Multi | Small Company vs. Emerging Markets Portfolio |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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