Correlation Between Johcm Emerging and Dreyfus Bond

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Can any of the company-specific risk be diversified away by investing in both Johcm Emerging and Dreyfus Bond 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 Johcm Emerging and Dreyfus Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johcm Emerging Markets and Dreyfus Bond Market, you can compare the effects of market volatilities on Johcm Emerging and Dreyfus Bond 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 Johcm Emerging with a short position of Dreyfus Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johcm Emerging and Dreyfus Bond.

Diversification Opportunities for Johcm Emerging and Dreyfus Bond

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Johcm and Dreyfus is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Johcm Emerging Markets and Dreyfus Bond Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Bond Market and Johcm 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 Johcm Emerging Markets are associated (or correlated) with Dreyfus Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Bond Market has no effect on the direction of Johcm Emerging i.e., Johcm Emerging and Dreyfus Bond go up and down completely randomly.

Pair Corralation between Johcm Emerging and Dreyfus Bond

Assuming the 90 days horizon Johcm Emerging Markets is expected to generate 2.13 times more return on investment than Dreyfus Bond. However, Johcm Emerging is 2.13 times more volatile than Dreyfus Bond Market. It trades about 0.03 of its potential returns per unit of risk. Dreyfus Bond Market is currently generating about 0.03 per unit of risk. If you would invest  1,048  in Johcm Emerging Markets on November 1, 2024 and sell it today you would earn a total of  112.00  from holding Johcm Emerging Markets or generate 10.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Johcm Emerging Markets  vs.  Dreyfus Bond Market

 Performance 
       Timeline  
Johcm Emerging Markets 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Johcm Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Johcm Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Dreyfus Bond Market 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dreyfus Bond Market has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dreyfus Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Johcm Emerging and Dreyfus Bond Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Johcm Emerging and Dreyfus Bond

The main advantage of trading using opposite Johcm Emerging and Dreyfus Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johcm Emerging position performs unexpectedly, Dreyfus Bond 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 Bond will offset losses from the drop in Dreyfus Bond's long position.
The idea behind Johcm Emerging Markets and Dreyfus Bond Market 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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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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