Correlation Between Dreyfus/newton International and Dreyfus Opportunistic
Can any of the company-specific risk be diversified away by investing in both Dreyfus/newton International and Dreyfus Opportunistic 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 Dreyfus/newton International and Dreyfus Opportunistic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfusnewton International Equity and Dreyfus Opportunistic Small, you can compare the effects of market volatilities on Dreyfus/newton International and Dreyfus Opportunistic 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 Dreyfus/newton International with a short position of Dreyfus Opportunistic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus/newton International and Dreyfus Opportunistic.
Diversification Opportunities for Dreyfus/newton International and Dreyfus Opportunistic
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dreyfus/newton and Dreyfus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusnewton International Eq and Dreyfus Opportunistic Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Opportunistic and Dreyfus/newton International 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 Dreyfusnewton International Equity are associated (or correlated) with Dreyfus Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Opportunistic has no effect on the direction of Dreyfus/newton International i.e., Dreyfus/newton International and Dreyfus Opportunistic go up and down completely randomly.
Pair Corralation between Dreyfus/newton International and Dreyfus Opportunistic
Assuming the 90 days horizon Dreyfusnewton International Equity is expected to under-perform the Dreyfus Opportunistic. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dreyfusnewton International Equity is 1.37 times less risky than Dreyfus Opportunistic. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Dreyfus Opportunistic Small is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,142 in Dreyfus Opportunistic Small on September 3, 2024 and sell it today you would earn a total of 273.00 from holding Dreyfus Opportunistic Small or generate 8.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfusnewton International Eq vs. Dreyfus Opportunistic Small
Performance |
| Timeline |
| Dreyfus/newton International |
| Dreyfus Opportunistic |
Dreyfus/newton International and Dreyfus Opportunistic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus/newton International and Dreyfus Opportunistic
The main advantage of trading using opposite Dreyfus/newton International and Dreyfus Opportunistic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus/newton International position performs unexpectedly, Dreyfus Opportunistic 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 Opportunistic will offset losses from the drop in Dreyfus Opportunistic's long position.The idea behind Dreyfusnewton International Equity and Dreyfus Opportunistic Small pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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