Correlation Between Financials Ultrasector and Dreyfus Municipal
Can any of the company-specific risk be diversified away by investing in both Financials Ultrasector and Dreyfus Municipal 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 Financials Ultrasector and Dreyfus Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financials Ultrasector Profund and Dreyfus Municipal Bond, you can compare the effects of market volatilities on Financials Ultrasector and Dreyfus Municipal 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 Financials Ultrasector with a short position of Dreyfus Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Dreyfus Municipal.
Diversification Opportunities for Financials Ultrasector and Dreyfus Municipal
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Financials and DREYFUS is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Dreyfus Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipal Bond and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Dreyfus Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipal Bond has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Dreyfus Municipal go up and down completely randomly.
Pair Corralation between Financials Ultrasector and Dreyfus Municipal
Assuming the 90 days horizon Financials Ultrasector Profund is expected to generate 7.03 times more return on investment than Dreyfus Municipal. However, Financials Ultrasector is 7.03 times more volatile than Dreyfus Municipal Bond. It trades about 0.34 of its potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about 0.18 per unit of risk. If you would invest 3,984 in Financials Ultrasector Profund on September 3, 2024 and sell it today you would earn a total of 646.00 from holding Financials Ultrasector Profund or generate 16.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financials Ultrasector Profund vs. Dreyfus Municipal Bond
Performance |
| Timeline |
| Financials Ultrasector |
| Dreyfus Municipal Bond |
Financials Ultrasector and Dreyfus Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financials Ultrasector and Dreyfus Municipal
The main advantage of trading using opposite Financials Ultrasector and Dreyfus Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financials Ultrasector position performs unexpectedly, Dreyfus Municipal 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 Municipal will offset losses from the drop in Dreyfus Municipal's long position.| Financials Ultrasector vs. American Century Etf | Financials Ultrasector vs. Boston Partners Small | Financials Ultrasector vs. Heartland Value Plus | Financials Ultrasector vs. Royce Opportunity Fund |
| Dreyfus Municipal vs. Financials Ultrasector Profund | Dreyfus Municipal vs. Icon Financial Fund | Dreyfus Municipal vs. Vanguard Financials Index | Dreyfus Municipal vs. Mesirow Financial Small |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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