Correlation Between College Retirement and Dreyfus Technology
Can any of the company-specific risk be diversified away by investing in both College Retirement 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 College Retirement and Dreyfus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Dreyfus Technology Growth, you can compare the effects of market volatilities on College Retirement 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 College Retirement with a short position of Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Dreyfus Technology.
Diversification Opportunities for College Retirement and Dreyfus Technology
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between College and Dreyfus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities 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 College Retirement 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 College Retirement Equities 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 College Retirement i.e., College Retirement and Dreyfus Technology go up and down completely randomly.
Pair Corralation between College Retirement and Dreyfus Technology
Assuming the 90 days trading horizon College Retirement is expected to generate 1.3 times less return on investment than Dreyfus Technology. But when comparing it to its historical volatility, College Retirement Equities is 1.72 times less risky than Dreyfus Technology. It trades about 0.1 of its potential returns per unit of risk. Dreyfus Technology Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,511 in Dreyfus Technology Growth on December 8, 2024 and sell it today you would earn a total of 2,832 from holding Dreyfus Technology Growth or generate 62.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
College Retirement Equities vs. Dreyfus Technology Growth
Performance |
| Timeline |
| College Retirement |
| Dreyfus Technology Growth |
College Retirement and Dreyfus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with College Retirement and Dreyfus Technology
The main advantage of trading using opposite College Retirement and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement 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.| College Retirement vs. T Rowe Price | College Retirement vs. Shelton Emerging Markets | College Retirement vs. Commodities Strategy Fund | College Retirement vs. Angel Oak Multi Strategy |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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