Correlation Between Dreyfus High and Dreyfus Midcap
Can any of the company-specific risk be diversified away by investing in both Dreyfus High 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 High 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 High Yield and Dreyfus Midcap Index, you can compare the effects of market volatilities on Dreyfus High 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 High with a short position of Dreyfus Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus High and Dreyfus Midcap.
Diversification Opportunities for Dreyfus High and Dreyfus Midcap
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dreyfus and DREYFUS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus High Yield 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 High 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 High Yield 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 High i.e., Dreyfus High and Dreyfus Midcap go up and down completely randomly.
Pair Corralation between Dreyfus High and Dreyfus Midcap
Assuming the 90 days horizon Dreyfus High Yield is expected to generate 0.24 times more return on investment than Dreyfus Midcap. However, Dreyfus High Yield is 4.12 times less risky than Dreyfus Midcap. It trades about 0.12 of its potential returns per unit of risk. Dreyfus Midcap Index is currently generating about 0.02 per unit of risk. If you would invest 456.00 in Dreyfus High Yield on August 26, 2024 and sell it today you would earn a total of 86.00 from holding Dreyfus High Yield or generate 18.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus High Yield vs. Dreyfus Midcap Index
Performance |
| Timeline |
| Dreyfus High Yield |
| Dreyfus Midcap Index |
Dreyfus High and Dreyfus Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus High and Dreyfus Midcap
The main advantage of trading using opposite Dreyfus High and Dreyfus Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus High 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 High vs. Dreyfusstandish Global Fixed | Dreyfus High vs. Dreyfusstandish Global Fixed | Dreyfus High vs. Dreyfus High Yield | Dreyfus High vs. Dreyfus High Yield |
| 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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