Correlation Between Balanced Fund and Dreyfus Natural
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Dreyfus Natural 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 Balanced Fund and Dreyfus Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Retail and Dreyfus Natural Resources, you can compare the effects of market volatilities on Balanced Fund and Dreyfus Natural 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 Balanced Fund with a short position of Dreyfus Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Dreyfus Natural.
Diversification Opportunities for Balanced Fund and Dreyfus Natural
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Balanced and Dreyfus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Dreyfus Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Natural Resources and Balanced Fund 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 Balanced Fund Retail are associated (or correlated) with Dreyfus Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Natural Resources has no effect on the direction of Balanced Fund i.e., Balanced Fund and Dreyfus Natural go up and down completely randomly.
Pair Corralation between Balanced Fund and Dreyfus Natural
Assuming the 90 days horizon Balanced Fund is expected to generate 2.58 times less return on investment than Dreyfus Natural. But when comparing it to its historical volatility, Balanced Fund Retail is 1.79 times less risky than Dreyfus Natural. It trades about 0.12 of its potential returns per unit of risk. Dreyfus Natural Resources is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,171 in Dreyfus Natural Resources on August 31, 2024 and sell it today you would earn a total of 175.00 from holding Dreyfus Natural Resources or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Retail vs. Dreyfus Natural Resources
Performance |
| Timeline |
| Balanced Fund Retail |
| Dreyfus Natural Resources |
Balanced Fund and Dreyfus Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Dreyfus Natural
The main advantage of trading using opposite Balanced Fund and Dreyfus Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Dreyfus Natural 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 Natural will offset losses from the drop in Dreyfus Natural's long position.| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
| Dreyfus Natural vs. Calamos Global Equity | Dreyfus Natural vs. Balanced Fund Retail | Dreyfus Natural vs. Scharf Fund Retail | Dreyfus Natural vs. Cutler Equity |
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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