Correlation Between Lgm Risk and Dreyfus Natural
Can any of the company-specific risk be diversified away by investing in both Lgm Risk and Dreyfus Natural 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 Lgm Risk and Dreyfus Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lgm Risk Managed and Dreyfus Natural Resources, you can compare the effects of market volatilities on Lgm Risk and Dreyfus Natural 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 Lgm Risk with a short position of Dreyfus Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lgm Risk and Dreyfus Natural.
Diversification Opportunities for Lgm Risk and Dreyfus Natural
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lgm and Dreyfus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lgm Risk Managed and Dreyfus Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Natural Resources and Lgm Risk 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 Lgm Risk Managed are associated (or correlated) with Dreyfus Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Natural Resources has no effect on the direction of Lgm Risk i.e., Lgm Risk and Dreyfus Natural go up and down completely randomly.
Pair Corralation between Lgm Risk and Dreyfus Natural
Assuming the 90 days horizon Lgm Risk is expected to generate 5.85 times less return on investment than Dreyfus Natural. But when comparing it to its historical volatility, Lgm Risk Managed is 3.14 times less risky than Dreyfus Natural. It trades about 0.13 of its potential returns per unit of risk. Dreyfus Natural Resources is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,186 in Dreyfus Natural Resources on August 25, 2024 and sell it today you would earn a total of 241.00 from holding Dreyfus Natural Resources or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lgm Risk Managed vs. Dreyfus Natural Resources
Performance |
| Timeline |
| Lgm Risk Managed |
| Dreyfus Natural Resources |
Lgm Risk and Dreyfus Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lgm Risk and Dreyfus Natural
The main advantage of trading using opposite Lgm Risk and Dreyfus Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lgm Risk position performs unexpectedly, Dreyfus Natural 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 Natural will offset losses from the drop in Dreyfus Natural's long position.| Lgm Risk vs. Invesco Vertible Securities | Lgm Risk vs. Miller Vertible Bond | Lgm Risk vs. Franklin Vertible Securities | Lgm Risk vs. Victory Incore Investment |
| Dreyfus Natural vs. California High Yield Municipal | Dreyfus Natural vs. Morningstar Aggressive Growth | Dreyfus Natural vs. Alliancebernstein Global High | Dreyfus Natural vs. Lgm Risk Managed |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |