Correlation Between Floating Rate and Dreyfus Government
Can any of the company-specific risk be diversified away by investing in both Floating Rate and Dreyfus Government 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 Floating Rate and Dreyfus Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and Dreyfus Government Cash, you can compare the effects of market volatilities on Floating Rate and Dreyfus Government 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 Floating Rate with a short position of Dreyfus Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and Dreyfus Government.
Diversification Opportunities for Floating Rate and Dreyfus Government
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Floating and Dreyfus is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund and Dreyfus Government Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Government Cash and Floating Rate 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 Floating Rate Fund are associated (or correlated) with Dreyfus Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Government Cash has no effect on the direction of Floating Rate i.e., Floating Rate and Dreyfus Government go up and down completely randomly.
Pair Corralation between Floating Rate and Dreyfus Government
Assuming the 90 days horizon Floating Rate Fund is expected to generate 1.07 times more return on investment than Dreyfus Government. However, Floating Rate is 1.07 times more volatile than Dreyfus Government Cash. It trades about 0.22 of its potential returns per unit of risk. Dreyfus Government Cash is currently generating about 0.13 per unit of risk. If you would invest 803.00 in Floating Rate Fund on September 12, 2024 and sell it today you would earn a total of 15.00 from holding Floating Rate Fund or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Floating Rate Fund vs. Dreyfus Government Cash
Performance |
| Timeline |
| Floating Rate |
| Dreyfus Government Cash |
Floating Rate and Dreyfus Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and Dreyfus Government
The main advantage of trading using opposite Floating Rate and Dreyfus Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate position performs unexpectedly, Dreyfus Government 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 Government will offset losses from the drop in Dreyfus Government's long position.| Floating Rate vs. Rational Defensive Growth | Floating Rate vs. Needham Aggressive Growth | Floating Rate vs. Chase Growth Fund | Floating Rate vs. Small Pany Growth |
| Dreyfus Government vs. Vanguard Total Stock | Dreyfus Government vs. Vanguard 500 Index | Dreyfus Government vs. Vanguard Total Stock | Dreyfus Government vs. Vanguard Total Stock |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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