Correlation Between Dreyfus Technology and Smallcap Value
Can any of the company-specific risk be diversified away by investing in both Dreyfus Technology and Smallcap Value 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 Technology and Smallcap Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Technology Growth and Smallcap Value Fund, you can compare the effects of market volatilities on Dreyfus Technology and Smallcap Value 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 Technology with a short position of Smallcap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Technology and Smallcap Value.
Diversification Opportunities for Dreyfus Technology and Smallcap Value
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dreyfus and Smallcap is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Technology Growth and Smallcap Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Value and Dreyfus Technology 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 Technology Growth are associated (or correlated) with Smallcap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Value has no effect on the direction of Dreyfus Technology i.e., Dreyfus Technology and Smallcap Value go up and down completely randomly.
Pair Corralation between Dreyfus Technology and Smallcap Value
Assuming the 90 days horizon Dreyfus Technology Growth is expected to generate 1.09 times more return on investment than Smallcap Value. However, Dreyfus Technology is 1.09 times more volatile than Smallcap Value Fund. It trades about 0.1 of its potential returns per unit of risk. Smallcap Value Fund is currently generating about 0.03 per unit of risk. If you would invest 4,261 in Dreyfus Technology Growth on September 3, 2024 and sell it today you would earn a total of 3,805 from holding Dreyfus Technology Growth or generate 89.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Technology Growth vs. Smallcap Value Fund
Performance |
| Timeline |
| Dreyfus Technology Growth |
| Smallcap Value |
Dreyfus Technology and Smallcap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Technology and Smallcap Value
The main advantage of trading using opposite Dreyfus Technology and Smallcap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Technology position performs unexpectedly, Smallcap Value 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 Smallcap Value will offset losses from the drop in Smallcap Value's long position.| Dreyfus Technology vs. Vanguard Information Technology | Dreyfus Technology vs. Technology Portfolio Technology | Dreyfus Technology vs. Fidelity Select Semiconductors | Dreyfus Technology vs. Software And It |
| Smallcap Value vs. Towpath Technology | Smallcap Value vs. Columbia Global Technology | Smallcap Value vs. Dreyfus Technology Growth | Smallcap Value vs. Pgim Jennison Technology |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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