Correlation Between Growth Fund and Dreyfus Technology
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Growth Fund and Dreyfus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Dreyfus Technology Growth, you can compare the effects of market volatilities on Growth Fund 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 Growth Fund with a short position of Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Dreyfus Technology.
Diversification Opportunities for Growth Fund and Dreyfus Technology
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Dreyfus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of 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 Growth Fund 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 Growth Fund Of 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 Growth Fund i.e., Growth Fund and Dreyfus Technology go up and down completely randomly.
Pair Corralation between Growth Fund and Dreyfus Technology
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.74 times more return on investment than Dreyfus Technology. However, Growth Fund Of is 1.35 times less risky than Dreyfus Technology. It trades about -0.09 of its potential returns per unit of risk. Dreyfus Technology Growth is currently generating about -0.09 per unit of risk. If you would invest 6,669 in Growth Fund Of on December 24, 2024 and sell it today you would lose (244.00) from holding Growth Fund Of or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Dreyfus Technology Growth
Performance |
| Timeline |
| Growth Fund |
| Dreyfus Technology Growth |
Growth Fund and Dreyfus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Dreyfus Technology
The main advantage of trading using opposite Growth Fund and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. Growth Fund Of | Growth Fund vs. Growth Fund Of |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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