Correlation Between Dreyfus Government and Highland Longshort
Can any of the company-specific risk be diversified away by investing in both Dreyfus Government and Highland Longshort 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 Government and Highland Longshort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Government Cash and Highland Longshort Healthcare, you can compare the effects of market volatilities on Dreyfus Government and Highland Longshort 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 Government with a short position of Highland Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Government and Highland Longshort.
Diversification Opportunities for Dreyfus Government and Highland Longshort
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dreyfus and Highland is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Government Cash and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Longshort and Dreyfus Government 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 Government Cash are associated (or correlated) with Highland Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Longshort has no effect on the direction of Dreyfus Government i.e., Dreyfus Government and Highland Longshort go up and down completely randomly.
Pair Corralation between Dreyfus Government and Highland Longshort
Assuming the 90 days horizon Dreyfus Government is expected to generate 1.02 times less return on investment than Highland Longshort. But when comparing it to its historical volatility, Dreyfus Government Cash is 1.51 times less risky than Highland Longshort. It trades about 0.13 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,645 in Highland Longshort Healthcare on October 26, 2024 and sell it today you would earn a total of 16.00 from holding Highland Longshort Healthcare or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.16% |
| Values | Daily Returns |
Dreyfus Government Cash vs. Highland Longshort Healthcare
Performance |
| Timeline |
| Dreyfus Government Cash |
| Highland Longshort |
Dreyfus Government and Highland Longshort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Government and Highland Longshort
The main advantage of trading using opposite Dreyfus Government and Highland Longshort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Government position performs unexpectedly, Highland Longshort 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 Highland Longshort will offset losses from the drop in Highland Longshort's long position.| Dreyfus Government vs. Transamerica Intermediate Muni | Dreyfus Government vs. Ab Global Bond | Dreyfus Government vs. Morningstar Defensive Bond | Dreyfus Government vs. Pace Municipal Fixed |
| Highland Longshort vs. Dreyfus Government Cash | Highland Longshort vs. Franklin Adjustable Government | Highland Longshort vs. Voya Government Money | Highland Longshort vs. Intermediate Government Bond |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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