Correlation Between Dreyfus Worldwide and American Funds
Can any of the company-specific risk be diversified away by investing in both Dreyfus Worldwide and American Funds 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 Worldwide and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Worldwide Growth and American Funds New, you can compare the effects of market volatilities on Dreyfus Worldwide and American Funds 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 Worldwide with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Worldwide and American Funds.
Diversification Opportunities for Dreyfus Worldwide and American Funds
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dreyfus and American is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Worldwide Growth and American Funds New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds New and Dreyfus Worldwide 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 Worldwide Growth are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds New has no effect on the direction of Dreyfus Worldwide i.e., Dreyfus Worldwide and American Funds go up and down completely randomly.
Pair Corralation between Dreyfus Worldwide and American Funds
Assuming the 90 days horizon Dreyfus Worldwide Growth is expected to generate 1.08 times more return on investment than American Funds. However, Dreyfus Worldwide is 1.08 times more volatile than American Funds New. It trades about 0.08 of its potential returns per unit of risk. American Funds New is currently generating about 0.05 per unit of risk. If you would invest 7,411 in Dreyfus Worldwide Growth on August 31, 2024 and sell it today you would earn a total of 96.00 from holding Dreyfus Worldwide Growth or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Worldwide Growth vs. American Funds New
Performance |
| Timeline |
| Dreyfus Worldwide Growth |
| American Funds New |
Dreyfus Worldwide and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Worldwide and American Funds
The main advantage of trading using opposite Dreyfus Worldwide and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Worldwide position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Dreyfus Worldwide vs. American Funds New | Dreyfus Worldwide vs. New Perspective Fund | Dreyfus Worldwide vs. New Perspective Fund |
| American Funds vs. Ishares Municipal Bond | American Funds vs. Nuveen Minnesota Municipal | American Funds vs. Federated Ohio Municipal | American Funds vs. Nuveen Arizona Municipal |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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