Correlation Between Fidelity Series and Dreyfus Global
Can any of the company-specific risk be diversified away by investing in both Fidelity Series and Dreyfus Global 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 Fidelity Series and Dreyfus Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Series Government and Dreyfus Global Dynamic, you can compare the effects of market volatilities on Fidelity Series and Dreyfus Global 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 Fidelity Series with a short position of Dreyfus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Dreyfus Global.
Diversification Opportunities for Fidelity Series and Dreyfus Global
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Dreyfus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series Government and Dreyfus Global Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Global Dynamic and Fidelity Series 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 Fidelity Series Government are associated (or correlated) with Dreyfus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Global Dynamic has no effect on the direction of Fidelity Series i.e., Fidelity Series and Dreyfus Global go up and down completely randomly.
Pair Corralation between Fidelity Series and Dreyfus Global
Assuming the 90 days horizon Fidelity Series is expected to generate 1.4 times less return on investment than Dreyfus Global. In addition to that, Fidelity Series is 2.76 times more volatile than Dreyfus Global Dynamic. It trades about 0.08 of its total potential returns per unit of risk. Dreyfus Global Dynamic is currently generating about 0.31 per unit of volatility. If you would invest 1,093 in Dreyfus Global Dynamic on September 4, 2024 and sell it today you would earn a total of 9.00 from holding Dreyfus Global Dynamic or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Fidelity Series Government vs. Dreyfus Global Dynamic
Performance |
| Timeline |
| Fidelity Series Gove |
| Dreyfus Global Dynamic |
Fidelity Series and Dreyfus Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Series and Dreyfus Global
The main advantage of trading using opposite Fidelity Series and Dreyfus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Series position performs unexpectedly, Dreyfus Global 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 Global will offset losses from the drop in Dreyfus Global's long position.The idea behind Fidelity Series Government and Dreyfus Global Dynamic 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.
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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