Correlation Between Dreyfus New and Pace High
Can any of the company-specific risk be diversified away by investing in both Dreyfus New and Pace High 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 New and Pace High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus New Jersey and Pace High Yield, you can compare the effects of market volatilities on Dreyfus New and Pace High 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 New with a short position of Pace High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus New and Pace High.
Diversification Opportunities for Dreyfus New and Pace High
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dreyfus and Pace is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus New Jersey and Pace High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace High Yield and Dreyfus New 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 New Jersey are associated (or correlated) with Pace High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace High Yield has no effect on the direction of Dreyfus New i.e., Dreyfus New and Pace High go up and down completely randomly.
Pair Corralation between Dreyfus New and Pace High
Assuming the 90 days horizon Dreyfus New is expected to generate 2.45 times less return on investment than Pace High. But when comparing it to its historical volatility, Dreyfus New Jersey is 1.01 times less risky than Pace High. It trades about 0.07 of its potential returns per unit of risk. Pace High Yield is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 740.00 in Pace High Yield on August 30, 2024 and sell it today you would earn a total of 158.00 from holding Pace High Yield or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus New Jersey vs. Pace High Yield
Performance |
| Timeline |
| Dreyfus New Jersey |
| Pace High Yield |
Dreyfus New and Pace High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus New and Pace High
The main advantage of trading using opposite Dreyfus New and Pace High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus New position performs unexpectedly, Pace High 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 Pace High will offset losses from the drop in Pace High's long position.| Dreyfus New vs. Ab Global Bond | Dreyfus New vs. Bbh Intermediate Municipal | Dreyfus New vs. Rbc Ultra Short Fixed | Dreyfus New vs. T Rowe Price |
| Pace High vs. Prudential High Yield | Pace High vs. HUMANA INC | Pace High vs. Aquagold International | Pace High vs. Barloworld Ltd ADR |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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