Correlation Between American Funds and Dreyfus/standish
Can any of the company-specific risk be diversified away by investing in both American Funds and Dreyfus/standish 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 American Funds and Dreyfus/standish into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2065 and Dreyfusstandish Global Fixed, you can compare the effects of market volatilities on American Funds and Dreyfus/standish 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 American Funds with a short position of Dreyfus/standish. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Dreyfus/standish.
Diversification Opportunities for American Funds and Dreyfus/standish
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Dreyfus/standish is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2065 and Dreyfusstandish Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfusstandish Global and American Funds 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 American Funds 2065 are associated (or correlated) with Dreyfus/standish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfusstandish Global has no effect on the direction of American Funds i.e., American Funds and Dreyfus/standish go up and down completely randomly.
Pair Corralation between American Funds and Dreyfus/standish
Assuming the 90 days horizon American Funds 2065 is expected to generate 3.68 times more return on investment than Dreyfus/standish. However, American Funds is 3.68 times more volatile than Dreyfusstandish Global Fixed. It trades about 0.07 of its potential returns per unit of risk. Dreyfusstandish Global Fixed is currently generating about 0.17 per unit of risk. If you would invest 1,796 in American Funds 2065 on August 30, 2024 and sell it today you would earn a total of 17.00 from holding American Funds 2065 or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Funds 2065 vs. Dreyfusstandish Global Fixed
Performance |
| Timeline |
| American Funds 2065 |
| Dreyfusstandish Global |
American Funds and Dreyfus/standish Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Dreyfus/standish
The main advantage of trading using opposite American Funds and Dreyfus/standish positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Dreyfus/standish 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/standish will offset losses from the drop in Dreyfus/standish's long position.| American Funds vs. Dreyfusstandish Global Fixed | American Funds vs. Artisan Global Unconstrained | American Funds vs. Commonwealth Global Fund | American Funds vs. Power Global Tactical |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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