Correlation Between Extended Market and Dreyfus Technology
Can any of the company-specific risk be diversified away by investing in both Extended Market 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 Extended Market and Dreyfus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Dreyfus Technology Growth, you can compare the effects of market volatilities on Extended Market 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 Extended Market with a short position of Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Dreyfus Technology.
Diversification Opportunities for Extended Market and Dreyfus Technology
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Extended and Dreyfus is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index 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 Extended Market 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 Extended Market Index 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 Extended Market i.e., Extended Market and Dreyfus Technology go up and down completely randomly.
Pair Corralation between Extended Market and Dreyfus Technology
Assuming the 90 days horizon Extended Market is expected to generate 1.93 times less return on investment than Dreyfus Technology. But when comparing it to its historical volatility, Extended Market Index is 1.25 times less risky than Dreyfus Technology. It trades about 0.07 of its potential returns per unit of risk. Dreyfus Technology Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,860 in Dreyfus Technology Growth on September 16, 2024 and sell it today you would earn a total of 4,107 from holding Dreyfus Technology Growth or generate 106.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extended Market Index vs. Dreyfus Technology Growth
Performance |
| Timeline |
| Extended Market Index |
| Dreyfus Technology Growth |
Extended Market and Dreyfus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extended Market and Dreyfus Technology
The main advantage of trading using opposite Extended Market and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market 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.| Extended Market vs. Income Fund Income | Extended Market vs. Usaa Nasdaq 100 | Extended Market vs. Victory Diversified Stock | Extended Market vs. Intermediate Term Bond Fund |
| Dreyfus Technology vs. Veea Inc | Dreyfus Technology vs. VivoPower International PLC | Dreyfus Technology vs. Dreyfus High Yield | Dreyfus Technology vs. Dreyfusthe Boston Pany |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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