Correlation Between Dreyfus/standish and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Dreyfus/standish and Ab Municipal 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/standish and Ab Municipal 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 Ab Municipal Income, you can compare the effects of market volatilities on Dreyfus/standish and Ab Municipal 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/standish with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus/standish and Ab Municipal.
Diversification Opportunities for Dreyfus/standish and Ab Municipal
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dreyfus/standish and MISHX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusstandish Global Fixed and Ab Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Income and Dreyfus/standish 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 Ab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Municipal Income has no effect on the direction of Dreyfus/standish i.e., Dreyfus/standish and Ab Municipal go up and down completely randomly.
Pair Corralation between Dreyfus/standish and Ab Municipal
Assuming the 90 days horizon Dreyfusstandish Global Fixed is expected to under-perform the Ab Municipal. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dreyfusstandish Global Fixed is 1.47 times less risky than Ab Municipal. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Ab Municipal Income is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,140 in Ab Municipal Income on August 28, 2024 and sell it today you would lose (6.00) from holding Ab Municipal Income or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfusstandish Global Fixed vs. Ab Municipal Income
Performance |
| Timeline |
| Dreyfusstandish Global |
| Ab Municipal Income |
Dreyfus/standish and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus/standish and Ab Municipal
The main advantage of trading using opposite Dreyfus/standish and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus/standish position performs unexpectedly, Ab Municipal 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 Ab Municipal will offset losses from the drop in Ab Municipal's long position.| Dreyfus/standish vs. Dreyfus High Yield | Dreyfus/standish vs. Dreyfus International Bond | Dreyfus/standish vs. Dreyfus International Bond | Dreyfus/standish vs. Dreyfus International Equity |
| Ab Municipal vs. Touchstone International Equity | Ab Municipal vs. Dreyfusstandish Global Fixed | Ab Municipal vs. Small Cap Equity | Ab Municipal vs. Locorr Dynamic Equity |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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