Correlation Between American Funds and Dreyfus Appreciation
Can any of the company-specific risk be diversified away by investing in both American Funds and Dreyfus Appreciation 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 American Funds and Dreyfus Appreciation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds The and Dreyfus Appreciation Fund, you can compare the effects of market volatilities on American Funds and Dreyfus Appreciation 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 American Funds with a short position of Dreyfus Appreciation. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Dreyfus Appreciation.
Diversification Opportunities for American Funds and Dreyfus Appreciation
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Dreyfus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Dreyfus Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Appreciation and American Funds 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 American Funds The are associated (or correlated) with Dreyfus Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Appreciation has no effect on the direction of American Funds i.e., American Funds and Dreyfus Appreciation go up and down completely randomly.
Pair Corralation between American Funds and Dreyfus Appreciation
Assuming the 90 days horizon American Funds The is expected to generate 1.58 times more return on investment than Dreyfus Appreciation. However, American Funds is 1.58 times more volatile than Dreyfus Appreciation Fund. It trades about 0.11 of its potential returns per unit of risk. Dreyfus Appreciation Fund is currently generating about 0.1 per unit of risk. If you would invest 5,595 in American Funds The on September 12, 2024 and sell it today you would earn a total of 2,757 from holding American Funds The or generate 49.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds The vs. Dreyfus Appreciation Fund
Performance |
| Timeline |
| American Funds |
| Dreyfus Appreciation |
American Funds and Dreyfus Appreciation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Dreyfus Appreciation
The main advantage of trading using opposite American Funds and Dreyfus Appreciation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Dreyfus Appreciation 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 Appreciation will offset losses from the drop in Dreyfus Appreciation's long position.| American Funds vs. Growth Fund Investor | American Funds vs. Select Fund Investor | American Funds vs. International Growth Fund | American Funds vs. Heritage Fund Investor |
| Dreyfus Appreciation vs. American Funds The | Dreyfus Appreciation vs. American Funds The | Dreyfus Appreciation vs. Growth Fund Of | Dreyfus Appreciation vs. Growth Fund Of |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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