Correlation Between Pace Municipal and Dreyfus Municipal
Can any of the company-specific risk be diversified away by investing in both Pace Municipal 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 Pace Municipal and Dreyfus Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Municipal Fixed and Dreyfus Municipal Bond, you can compare the effects of market volatilities on Pace Municipal 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 Pace Municipal with a short position of Dreyfus Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Dreyfus Municipal.
Diversification Opportunities for Pace Municipal and Dreyfus Municipal
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pace and Dreyfus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed 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 Pace Municipal 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 Pace Municipal Fixed 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 Pace Municipal i.e., Pace Municipal and Dreyfus Municipal go up and down completely randomly.
Pair Corralation between Pace Municipal and Dreyfus Municipal
Assuming the 90 days horizon Pace Municipal Fixed is expected to generate 0.37 times more return on investment than Dreyfus Municipal. However, Pace Municipal Fixed is 2.72 times less risky than Dreyfus Municipal. It trades about -0.31 of its potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about -0.26 per unit of risk. If you would invest 1,231 in Pace Municipal Fixed on October 11, 2024 and sell it today you would lose (16.00) from holding Pace Municipal Fixed or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Dreyfus Municipal Bond
Performance |
| Timeline |
| Pace Municipal Fixed |
| Dreyfus Municipal Bond |
Pace Municipal and Dreyfus Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Dreyfus Municipal
The main advantage of trading using opposite Pace Municipal and Dreyfus Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal 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.| Pace Municipal vs. Qs Global Equity | Pace Municipal vs. Federated Global Allocation | Pace Municipal vs. Legg Mason Global | Pace Municipal vs. Aqr Large Cap |
| Dreyfus Municipal vs. Fidelity Advisor Financial | Dreyfus Municipal vs. Financial Industries Fund | Dreyfus Municipal vs. Vanguard Financials Index | Dreyfus Municipal vs. Putnam Global Financials |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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