Correlation Between American Funds and Dreyfus Worldwide
Can any of the company-specific risk be diversified away by investing in both American Funds and Dreyfus Worldwide 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 Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Dreyfus Worldwide Growth, you can compare the effects of market volatilities on American Funds and Dreyfus Worldwide 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 Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Dreyfus Worldwide.
Diversification Opportunities for American Funds and Dreyfus Worldwide
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Dreyfus is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Dreyfus Worldwide Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Worldwide Growth 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 New are associated (or correlated) with Dreyfus Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Worldwide Growth has no effect on the direction of American Funds i.e., American Funds and Dreyfus Worldwide go up and down completely randomly.
Pair Corralation between American Funds and Dreyfus Worldwide
Assuming the 90 days horizon American Funds New is expected to generate 1.0 times more return on investment than Dreyfus Worldwide. However, American Funds is 1.0 times more volatile than Dreyfus Worldwide Growth. It trades about 0.21 of its potential returns per unit of risk. Dreyfus Worldwide Growth is currently generating about 0.2 per unit of risk. If you would invest 6,455 in American Funds New on September 3, 2024 and sell it today you would earn a total of 175.00 from holding American Funds New or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds New vs. Dreyfus Worldwide Growth
Performance |
| Timeline |
| American Funds New |
| Dreyfus Worldwide Growth |
American Funds and Dreyfus Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Dreyfus Worldwide
The main advantage of trading using opposite American Funds and Dreyfus Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Dreyfus Worldwide 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 Worldwide will offset losses from the drop in Dreyfus Worldwide's long position.| American Funds vs. The Hartford Small | American Funds vs. Oklahoma College Savings | American Funds vs. Ab Small Cap | American Funds vs. Small Cap Value |
| Dreyfus Worldwide vs. American Funds New | Dreyfus Worldwide vs. American Funds New | Dreyfus Worldwide vs. New Perspective Fund | Dreyfus Worldwide vs. New Perspective Fund |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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