Correlation Between DWS Municipal and Dreyfus High
Can any of the company-specific risk be diversified away by investing in both DWS Municipal and Dreyfus High 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 DWS Municipal and Dreyfus High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DWS Municipal Income and Dreyfus High Yield, you can compare the effects of market volatilities on DWS Municipal and Dreyfus High 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 DWS Municipal with a short position of Dreyfus High. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and Dreyfus High.
Diversification Opportunities for DWS Municipal and Dreyfus High
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DWS and Dreyfus is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and Dreyfus High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus High Yield and DWS Municipal 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 DWS Municipal Income are associated (or correlated) with Dreyfus High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus High Yield has no effect on the direction of DWS Municipal i.e., DWS Municipal and Dreyfus High go up and down completely randomly.
Pair Corralation between DWS Municipal and Dreyfus High
Considering the 90-day investment horizon DWS Municipal Income is expected to generate 1.35 times more return on investment than Dreyfus High. However, DWS Municipal is 1.35 times more volatile than Dreyfus High Yield. It trades about 0.25 of its potential returns per unit of risk. Dreyfus High Yield is currently generating about 0.14 per unit of risk. If you would invest 965.00 in DWS Municipal Income on August 29, 2024 and sell it today you would earn a total of 33.00 from holding DWS Municipal Income or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DWS Municipal Income vs. Dreyfus High Yield
Performance |
| Timeline |
| DWS Municipal Income |
| Dreyfus High Yield |
DWS Municipal and Dreyfus High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DWS Municipal and Dreyfus High
The main advantage of trading using opposite DWS Municipal and Dreyfus High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DWS Municipal position performs unexpectedly, Dreyfus High 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 High will offset losses from the drop in Dreyfus High's long position.| DWS Municipal vs. Aurora Innovation | DWS Municipal vs. HUMANA INC | DWS Municipal vs. Aquagold International | DWS Municipal vs. Barloworld Ltd ADR |
| Dreyfus High vs. Dreyfusstandish Global Fixed | Dreyfus High vs. Dreyfusstandish Global Fixed | Dreyfus High vs. Dreyfus New Jersey | Dreyfus High vs. Dreyfus International Bond |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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