Correlation Between Dreyfus Municipal and Vanguard New
Can any of the company-specific risk be diversified away by investing in both Dreyfus Municipal and Vanguard New 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 Municipal and Vanguard New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Municipal Bond and Vanguard New York, you can compare the effects of market volatilities on Dreyfus Municipal and Vanguard New 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 Municipal with a short position of Vanguard New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Municipal and Vanguard New.
Diversification Opportunities for Dreyfus Municipal and Vanguard New
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dreyfus and Vanguard is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Municipal Bond and Vanguard New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard New York and Dreyfus Municipal 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 Municipal Bond are associated (or correlated) with Vanguard New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard New York has no effect on the direction of Dreyfus Municipal i.e., Dreyfus Municipal and Vanguard New go up and down completely randomly.
Pair Corralation between Dreyfus Municipal and Vanguard New
Assuming the 90 days horizon Dreyfus Municipal is expected to generate 1.71 times less return on investment than Vanguard New. But when comparing it to its historical volatility, Dreyfus Municipal Bond is 1.41 times less risky than Vanguard New. It trades about 0.05 of its potential returns per unit of risk. Vanguard New York is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,014 in Vanguard New York on September 3, 2024 and sell it today you would earn a total of 91.00 from holding Vanguard New York or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.0% |
| Values | Daily Returns |
Dreyfus Municipal Bond vs. Vanguard New York
Performance |
| Timeline |
| Dreyfus Municipal Bond |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Vanguard New York |
Dreyfus Municipal and Vanguard New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Municipal and Vanguard New
The main advantage of trading using opposite Dreyfus Municipal and Vanguard New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Municipal position performs unexpectedly, Vanguard New 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 Vanguard New will offset losses from the drop in Vanguard New's long position.| Dreyfus Municipal vs. Dreyfus Intermediate Municipal | Dreyfus Municipal vs. Dreyfus Gnma Fund | Dreyfus Municipal vs. Fidelity Municipal Income | Dreyfus Municipal vs. T Rowe Price |
| Vanguard New vs. Vanguard New Jersey | Vanguard New vs. Vanguard Long Term Tax Exempt | Vanguard New vs. Vanguard Massachusetts Tax Exempt | Vanguard New vs. Vanguard Ohio Long Term |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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