Correlation Between Dreyfus/the Boston and Dreyfus Municipal
Can any of the company-specific risk be diversified away by investing in both Dreyfus/the Boston and Dreyfus Municipal 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 Dreyfus/the Boston and Dreyfus Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfusthe Boston Pany and Dreyfus Municipal Bond, you can compare the effects of market volatilities on Dreyfus/the Boston and Dreyfus Municipal 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 Dreyfus/the Boston with a short position of Dreyfus Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus/the Boston and Dreyfus Municipal.
Diversification Opportunities for Dreyfus/the Boston and Dreyfus Municipal
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dreyfus/the and DREYFUS is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusthe Boston Pany and Dreyfus Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipal Bond and Dreyfus/the Boston 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 Dreyfusthe Boston Pany are associated (or correlated) with Dreyfus Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipal Bond has no effect on the direction of Dreyfus/the Boston i.e., Dreyfus/the Boston and Dreyfus Municipal go up and down completely randomly.
Pair Corralation between Dreyfus/the Boston and Dreyfus Municipal
Assuming the 90 days horizon Dreyfusthe Boston Pany is expected to generate 5.11 times more return on investment than Dreyfus Municipal. However, Dreyfus/the Boston is 5.11 times more volatile than Dreyfus Municipal Bond. It trades about 0.05 of its potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about 0.08 per unit of risk. If you would invest 3,276 in Dreyfusthe Boston Pany on September 3, 2024 and sell it today you would earn a total of 1,012 from holding Dreyfusthe Boston Pany or generate 30.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfusthe Boston Pany vs. Dreyfus Municipal Bond
Performance |
| Timeline |
| Dreyfusthe Boston Pany |
| Dreyfus Municipal Bond |
Dreyfus/the Boston and Dreyfus Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus/the Boston and Dreyfus Municipal
The main advantage of trading using opposite Dreyfus/the Boston and Dreyfus Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus/the Boston position performs unexpectedly, Dreyfus Municipal 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 Municipal will offset losses from the drop in Dreyfus Municipal's long position.| Dreyfus/the Boston vs. Nuveen Small Cap | Dreyfus/the Boston vs. Dreyfusthe Boston Pany | Dreyfus/the Boston vs. Neuberger Berman Small | Dreyfus/the Boston vs. Virtus Kar Small Cap |
| Dreyfus Municipal vs. Financials Ultrasector Profund | Dreyfus Municipal vs. Icon Financial Fund | Dreyfus Municipal vs. Vanguard Financials Index | Dreyfus Municipal vs. Mesirow Financial Small |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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