Correlation Between Microsoft and Dreyfus Municipal
Can any of the company-specific risk be diversified away by investing in both Microsoft and Dreyfus Municipal 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 Microsoft and Dreyfus Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Dreyfus Municipal Bond, you can compare the effects of market volatilities on Microsoft and Dreyfus Municipal 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 Microsoft with a short position of Dreyfus Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Dreyfus Municipal.
Diversification Opportunities for Microsoft and Dreyfus Municipal
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Dreyfus is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Dreyfus Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipal Bond and Microsoft 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 Microsoft are associated (or correlated) with Dreyfus Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipal Bond has no effect on the direction of Microsoft i.e., Microsoft and Dreyfus Municipal go up and down completely randomly.
Pair Corralation between Microsoft and Dreyfus Municipal
Given the investment horizon of 90 days Microsoft is expected to generate 2.78 times less return on investment than Dreyfus Municipal. In addition to that, Microsoft is 3.09 times more volatile than Dreyfus Municipal Bond. It trades about 0.01 of its total potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about 0.07 per unit of volatility. If you would invest 1,197 in Dreyfus Municipal Bond on September 3, 2024 and sell it today you would earn a total of 41.00 from holding Dreyfus Municipal Bond or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Dreyfus Municipal Bond
Performance |
| Timeline |
| Microsoft |
| Dreyfus Municipal Bond |
Microsoft and Dreyfus Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Dreyfus Municipal
The main advantage of trading using opposite Microsoft and Dreyfus Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Dreyfus Municipal 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 Municipal will offset losses from the drop in Dreyfus Municipal's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Dreyfus Municipal vs. Vanguard Total Stock | Dreyfus Municipal vs. Vanguard 500 Index | Dreyfus Municipal vs. Vanguard Total Stock | Dreyfus Municipal 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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