Correlation Between Dreyfusstandish Global and The Fairholme
Can any of the company-specific risk be diversified away by investing in both Dreyfusstandish Global and The Fairholme 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 Dreyfusstandish Global and The Fairholme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfusstandish Global Fixed and The Fairholme Fund, you can compare the effects of market volatilities on Dreyfusstandish Global and The Fairholme 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 Dreyfusstandish Global with a short position of The Fairholme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfusstandish Global and The Fairholme.
Diversification Opportunities for Dreyfusstandish Global and The Fairholme
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dreyfusstandish and The is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusstandish Global Fixed and The Fairholme Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Fairholme and Dreyfusstandish Global 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 Dreyfusstandish Global Fixed are associated (or correlated) with The Fairholme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Fairholme has no effect on the direction of Dreyfusstandish Global i.e., Dreyfusstandish Global and The Fairholme go up and down completely randomly.
Pair Corralation between Dreyfusstandish Global and The Fairholme
Assuming the 90 days horizon Dreyfusstandish Global is expected to generate 3.3 times less return on investment than The Fairholme. But when comparing it to its historical volatility, Dreyfusstandish Global Fixed is 5.85 times less risky than The Fairholme. It trades about 0.09 of its potential returns per unit of risk. The Fairholme Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,383 in The Fairholme Fund on September 3, 2024 and sell it today you would earn a total of 929.00 from holding The Fairholme Fund or generate 38.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfusstandish Global Fixed vs. The Fairholme Fund
Performance |
| Timeline |
| Dreyfusstandish Global |
| The Fairholme |
Dreyfusstandish Global and The Fairholme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfusstandish Global and The Fairholme
The main advantage of trading using opposite Dreyfusstandish Global and The Fairholme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfusstandish Global position performs unexpectedly, The Fairholme 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 The Fairholme will offset losses from the drop in The Fairholme's long position.The idea behind Dreyfusstandish Global Fixed and The Fairholme Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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