Correlation Between The Emerging and Dreyfus International
Can any of the company-specific risk be diversified away by investing in both The Emerging and Dreyfus International 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 The Emerging and Dreyfus International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Emerging Markets and Dreyfus International Bond, you can compare the effects of market volatilities on The Emerging and Dreyfus International 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 The Emerging with a short position of Dreyfus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Emerging and Dreyfus International.
Diversification Opportunities for The Emerging and Dreyfus International
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between The and Dreyfus is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Dreyfus International Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus International and The Emerging 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 The Emerging Markets are associated (or correlated) with Dreyfus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus International has no effect on the direction of The Emerging i.e., The Emerging and Dreyfus International go up and down completely randomly.
Pair Corralation between The Emerging and Dreyfus International
Assuming the 90 days horizon The Emerging Markets is expected to generate 1.99 times more return on investment than Dreyfus International. However, The Emerging is 1.99 times more volatile than Dreyfus International Bond. It trades about 0.03 of its potential returns per unit of risk. Dreyfus International Bond is currently generating about 0.02 per unit of risk. If you would invest 1,644 in The Emerging Markets on September 3, 2024 and sell it today you would earn a total of 223.00 from holding The Emerging Markets or generate 13.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Emerging Markets vs. Dreyfus International Bond
Performance |
| Timeline |
| Emerging Markets |
| Dreyfus International |
The Emerging and Dreyfus International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Emerging and Dreyfus International
The main advantage of trading using opposite The Emerging and Dreyfus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Emerging position performs unexpectedly, Dreyfus International 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 International will offset losses from the drop in Dreyfus International's long position.| The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard 500 Index | The Emerging vs. Vanguard Total Stock | The Emerging vs. Vanguard Total Stock |
| Dreyfus International vs. Calamos Market Neutral | Dreyfus International vs. Legg Mason Partners | Dreyfus International vs. Ep Emerging Markets | Dreyfus International vs. The Emerging Markets |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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