Correlation Between Europacific Growth and Dreyfus Smallcap
Can any of the company-specific risk be diversified away by investing in both Europacific Growth and Dreyfus Smallcap 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 Europacific Growth and Dreyfus Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europacific Growth Fund and Dreyfus Smallcap Stock, you can compare the effects of market volatilities on Europacific Growth and Dreyfus Smallcap 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 Europacific Growth with a short position of Dreyfus Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and Dreyfus Smallcap.
Diversification Opportunities for Europacific Growth and Dreyfus Smallcap
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Europacific and Dreyfus is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and Dreyfus Smallcap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Smallcap Stock and Europacific Growth 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 Europacific Growth Fund are associated (or correlated) with Dreyfus Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Smallcap Stock has no effect on the direction of Europacific Growth i.e., Europacific Growth and Dreyfus Smallcap go up and down completely randomly.
Pair Corralation between Europacific Growth and Dreyfus Smallcap
Assuming the 90 days horizon Europacific Growth Fund is expected to under-perform the Dreyfus Smallcap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Europacific Growth Fund is 1.93 times less risky than Dreyfus Smallcap. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Dreyfus Smallcap Stock is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,810 in Dreyfus Smallcap Stock on August 25, 2024 and sell it today you would earn a total of 157.00 from holding Dreyfus Smallcap Stock or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europacific Growth Fund vs. Dreyfus Smallcap Stock
Performance |
| Timeline |
| Europacific Growth |
| Dreyfus Smallcap Stock |
Europacific Growth and Dreyfus Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europacific Growth and Dreyfus Smallcap
The main advantage of trading using opposite Europacific Growth and Dreyfus Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth position performs unexpectedly, Dreyfus Smallcap 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 Smallcap will offset losses from the drop in Dreyfus Smallcap's long position.| Europacific Growth vs. Income Fund Of | Europacific Growth vs. New World Fund | Europacific Growth vs. American Mutual Fund | Europacific Growth vs. American Mutual Fund |
| Dreyfus Smallcap vs. Dreyfus Midcap Index | Dreyfus Smallcap vs. Dreyfus International Stock | Dreyfus Smallcap vs. Dreyfus Sp 500 | Dreyfus Smallcap vs. Dreyfus Bond Market |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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