Correlation Between Prudential High and Dreyfus Appreciation
Can any of the company-specific risk be diversified away by investing in both Prudential High and Dreyfus Appreciation 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 Prudential High and Dreyfus Appreciation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential High Yield and Dreyfus Appreciation Fund, you can compare the effects of market volatilities on Prudential High and Dreyfus Appreciation 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 Prudential High with a short position of Dreyfus Appreciation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and Dreyfus Appreciation.
Diversification Opportunities for Prudential High and Dreyfus Appreciation
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and Dreyfus is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and Dreyfus Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Appreciation and Prudential High 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 Prudential High Yield are associated (or correlated) with Dreyfus Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Appreciation has no effect on the direction of Prudential High i.e., Prudential High and Dreyfus Appreciation go up and down completely randomly.
Pair Corralation between Prudential High and Dreyfus Appreciation
Assuming the 90 days horizon Prudential High is expected to generate 7.29 times less return on investment than Dreyfus Appreciation. But when comparing it to its historical volatility, Prudential High Yield is 4.13 times less risky than Dreyfus Appreciation. It trades about 0.08 of its potential returns per unit of risk. Dreyfus Appreciation Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,578 in Dreyfus Appreciation Fund on September 13, 2024 and sell it today you would earn a total of 72.00 from holding Dreyfus Appreciation Fund or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Prudential High Yield vs. Dreyfus Appreciation Fund
Performance |
| Timeline |
| Prudential High Yield |
| Dreyfus Appreciation |
Prudential High and Dreyfus Appreciation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential High and Dreyfus Appreciation
The main advantage of trading using opposite Prudential High and Dreyfus Appreciation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential High position performs unexpectedly, Dreyfus Appreciation 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 Appreciation will offset losses from the drop in Dreyfus Appreciation's long position.| Prudential High vs. Prudential Total Return | Prudential High vs. Metropolitan West Total | Prudential High vs. John Hancock Disciplined | Prudential High vs. Europacific Growth Fund |
| Dreyfus Appreciation vs. Alpine High Yield | Dreyfus Appreciation vs. Fidelity Capital Income | Dreyfus Appreciation vs. Jpmorgan High Yield | Dreyfus Appreciation vs. Prudential High Yield |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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