Correlation Between Fabxx and Dreyfus Municipalome
Can any of the company-specific risk be diversified away by investing in both Fabxx and Dreyfus Municipalome 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 Fabxx and Dreyfus Municipalome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabxx and Dreyfus Municipalome, you can compare the effects of market volatilities on Fabxx and Dreyfus Municipalome 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 Fabxx with a short position of Dreyfus Municipalome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabxx and Dreyfus Municipalome.
Diversification Opportunities for Fabxx and Dreyfus Municipalome
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fabxx and Dreyfus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fabxx and Dreyfus Municipalome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipalome and Fabxx 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 Fabxx are associated (or correlated) with Dreyfus Municipalome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipalome has no effect on the direction of Fabxx i.e., Fabxx and Dreyfus Municipalome go up and down completely randomly.
Pair Corralation between Fabxx and Dreyfus Municipalome
Assuming the 90 days horizon Fabxx is expected to under-perform the Dreyfus Municipalome. In addition to that, Fabxx is 49.29 times more volatile than Dreyfus Municipalome. It trades about -0.22 of its total potential returns per unit of risk. Dreyfus Municipalome is currently generating about 0.41 per unit of volatility. If you would invest 771.00 in Dreyfus Municipalome on September 12, 2024 and sell it today you would earn a total of 15.00 from holding Dreyfus Municipalome or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabxx vs. Dreyfus Municipalome
Performance |
| Timeline |
| Fabxx |
| Dreyfus Municipalome |
Fabxx and Dreyfus Municipalome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabxx and Dreyfus Municipalome
The main advantage of trading using opposite Fabxx and Dreyfus Municipalome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabxx position performs unexpectedly, Dreyfus Municipalome 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 Municipalome will offset losses from the drop in Dreyfus Municipalome's long position.| Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard 500 Index | Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard Total Stock |
| Dreyfus Municipalome vs. Vanguard Total Stock | Dreyfus Municipalome vs. Vanguard 500 Index | Dreyfus Municipalome vs. Vanguard Total Stock | Dreyfus Municipalome vs. Vanguard Total Stock |
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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