Correlation Between Fm Investments and Dreyfus Strategic
Can any of the company-specific risk be diversified away by investing in both Fm Investments and Dreyfus Strategic 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 Fm Investments and Dreyfus Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fm Investments Large and Dreyfus Strategic Municipal, you can compare the effects of market volatilities on Fm Investments and Dreyfus Strategic 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 Fm Investments with a short position of Dreyfus Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fm Investments and Dreyfus Strategic.
Diversification Opportunities for Fm Investments and Dreyfus Strategic
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IAFLX and Dreyfus is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fm Investments Large and Dreyfus Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Strategic and Fm Investments 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 Fm Investments Large are associated (or correlated) with Dreyfus Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Strategic has no effect on the direction of Fm Investments i.e., Fm Investments and Dreyfus Strategic go up and down completely randomly.
Pair Corralation between Fm Investments and Dreyfus Strategic
Assuming the 90 days horizon Fm Investments Large is expected to generate 1.9 times more return on investment than Dreyfus Strategic. However, Fm Investments is 1.9 times more volatile than Dreyfus Strategic Municipal. It trades about 0.19 of its potential returns per unit of risk. Dreyfus Strategic Municipal is currently generating about 0.03 per unit of risk. If you would invest 1,751 in Fm Investments Large on September 12, 2024 and sell it today you would earn a total of 199.00 from holding Fm Investments Large or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fm Investments Large vs. Dreyfus Strategic Municipal
Performance |
| Timeline |
| Fm Investments Large |
| Dreyfus Strategic |
Fm Investments and Dreyfus Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fm Investments and Dreyfus Strategic
The main advantage of trading using opposite Fm Investments and Dreyfus Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fm Investments position performs unexpectedly, Dreyfus Strategic 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 Strategic will offset losses from the drop in Dreyfus Strategic's long position.The idea behind Fm Investments Large and Dreyfus Strategic Municipal 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.| Dreyfus Strategic vs. Volumetric Fund Volumetric | Dreyfus Strategic vs. Balanced Fund Investor | Dreyfus Strategic vs. Ab Value Fund | Dreyfus Strategic vs. Fa 529 Aggressive |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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