Correlation Between Small Company and Dreyfus Technology
Can any of the company-specific risk be diversified away by investing in both Small Company and Dreyfus Technology 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 Small Company and Dreyfus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Dreyfus Technology Growth, you can compare the effects of market volatilities on Small Company and Dreyfus Technology 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 Small Company with a short position of Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Dreyfus Technology.
Diversification Opportunities for Small Company and Dreyfus Technology
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Dreyfus is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Dreyfus Technology Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Technology Growth and Small Company 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 Small Pany Growth are associated (or correlated) with Dreyfus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Technology Growth has no effect on the direction of Small Company i.e., Small Company and Dreyfus Technology go up and down completely randomly.
Pair Corralation between Small Company and Dreyfus Technology
Assuming the 90 days horizon Small Pany Growth is expected to generate 1.98 times more return on investment than Dreyfus Technology. However, Small Company is 1.98 times more volatile than Dreyfus Technology Growth. It trades about 0.66 of its potential returns per unit of risk. Dreyfus Technology Growth is currently generating about 0.31 per unit of risk. If you would invest 1,285 in Small Pany Growth on September 3, 2024 and sell it today you would earn a total of 384.00 from holding Small Pany Growth or generate 29.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Dreyfus Technology Growth
Performance |
| Timeline |
| Small Pany Growth |
| Dreyfus Technology Growth |
Small Company and Dreyfus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Dreyfus Technology
The main advantage of trading using opposite Small Company and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company position performs unexpectedly, Dreyfus Technology 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 Technology will offset losses from the drop in Dreyfus Technology's long position.| Small Company vs. Mid Cap Growth | Small Company vs. Growth Portfolio Class | Small Company vs. Morgan Stanley Multi | Small Company vs. Emerging Markets Portfolio |
| Dreyfus Technology vs. Pace Smallmedium Growth | Dreyfus Technology vs. Smallcap Growth Fund | Dreyfus Technology vs. Small Pany Growth | Dreyfus Technology vs. Champlain Mid Cap |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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