Correlation Between Oil Gas and Dreyfus New

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Can any of the company-specific risk be diversified away by investing in both Oil Gas and Dreyfus New 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 Oil Gas and Dreyfus New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Gas Ultrasector and Dreyfus New York, you can compare the effects of market volatilities on Oil Gas and Dreyfus New 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 Oil Gas with a short position of Dreyfus New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Gas and Dreyfus New.

Diversification Opportunities for Oil Gas and Dreyfus New

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Oil and Dreyfus is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector and Dreyfus New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus New York and Oil Gas 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 Oil Gas Ultrasector are associated (or correlated) with Dreyfus New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus New York has no effect on the direction of Oil Gas i.e., Oil Gas and Dreyfus New go up and down completely randomly.

Pair Corralation between Oil Gas and Dreyfus New

Assuming the 90 days horizon Oil Gas Ultrasector is expected to generate 7.95 times more return on investment than Dreyfus New. However, Oil Gas is 7.95 times more volatile than Dreyfus New York. It trades about 0.02 of its potential returns per unit of risk. Dreyfus New York is currently generating about 0.11 per unit of risk. If you would invest  3,425  in Oil Gas Ultrasector on September 14, 2024 and sell it today you would earn a total of  262.00  from holding Oil Gas Ultrasector or generate 7.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.63%
ValuesDaily Returns

Oil Gas Ultrasector  vs.  Dreyfus New York

 Performance 
       Timeline  
Oil Gas Ultrasector 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Oil Gas Ultrasector are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oil Gas may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Dreyfus New York 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dreyfus New York has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dreyfus New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oil Gas and Dreyfus New Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oil Gas and Dreyfus New

The main advantage of trading using opposite Oil Gas and Dreyfus New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Gas position performs unexpectedly, Dreyfus New 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 Dreyfus New will offset losses from the drop in Dreyfus New's long position.
The idea behind Oil Gas Ultrasector and Dreyfus New York 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.
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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