Correlation Between Nasdaq-100(r) and Dreyfus Short
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Dreyfus Short 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 Nasdaq-100(r) and Dreyfus Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Dreyfus Short Intermediate, you can compare the effects of market volatilities on Nasdaq-100(r) and Dreyfus Short 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 Nasdaq-100(r) with a short position of Dreyfus Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Dreyfus Short.
Diversification Opportunities for Nasdaq-100(r) and Dreyfus Short
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq-100(r) and Dreyfus is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Dreyfus Short Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Short Interm and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy are associated (or correlated) with Dreyfus Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Short Interm has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Dreyfus Short go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Dreyfus Short
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 25.52 times more return on investment than Dreyfus Short. However, Nasdaq-100(r) is 25.52 times more volatile than Dreyfus Short Intermediate. It trades about 0.09 of its potential returns per unit of risk. Dreyfus Short Intermediate is currently generating about 0.11 per unit of risk. If you would invest 18,004 in Nasdaq 100 2x Strategy on October 25, 2024 and sell it today you would earn a total of 23,618 from holding Nasdaq 100 2x Strategy or generate 131.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Dreyfus Short Intermediate
Performance |
| Timeline |
| Nasdaq 100 2x |
| Dreyfus Short Interm |
Nasdaq-100(r) and Dreyfus Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Dreyfus Short
The main advantage of trading using opposite Nasdaq-100(r) and Dreyfus Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Dreyfus Short 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 Short will offset losses from the drop in Dreyfus Short's long position.| Nasdaq-100(r) vs. T Rowe Price | Nasdaq-100(r) vs. Dreyfusstandish Global Fixed | Nasdaq-100(r) vs. Siit High Yield | Nasdaq-100(r) vs. T Rowe Price |
| Dreyfus Short vs. Large Cap Growth Profund | Dreyfus Short vs. Blackrock Large Cap | Dreyfus Short vs. Nuveen Nwq Large Cap | Dreyfus Short vs. Transamerica Large Cap |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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