Correlation Between Vanguard and Dreyfus Municipal
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 Vanguard and Dreyfus Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Multifactor and Dreyfus Municipal Bond, you can compare the effects of market volatilities on Vanguard 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 Vanguard with a short position of Dreyfus Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Dreyfus Municipal.
Diversification Opportunities for Vanguard and Dreyfus Municipal
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Dreyfus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Multifactor 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 Vanguard 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 Vanguard Multifactor 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 Vanguard i.e., Vanguard and Dreyfus Municipal go up and down completely randomly.
Pair Corralation between Vanguard and Dreyfus Municipal
Assuming the 90 days horizon Vanguard Multifactor is expected to generate 1.84 times more return on investment than Dreyfus Municipal. However, Vanguard is 1.84 times more volatile than Dreyfus Municipal Bond. It trades about 0.18 of its potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about -0.04 per unit of risk. If you would invest 4,236 in Vanguard Multifactor on August 29, 2024 and sell it today you would earn a total of 329.00 from holding Vanguard Multifactor or generate 7.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Multifactor vs. Dreyfus Municipal Bond
Performance |
| Timeline |
| Vanguard Multifactor |
| Dreyfus Municipal Bond |
Vanguard and Dreyfus Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Dreyfus Municipal
The main advantage of trading using opposite Vanguard and Dreyfus Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.| Vanguard vs. Multisector Bond Sma | Vanguard vs. Touchstone Ohio Tax | Vanguard vs. John Hancock Money | Vanguard vs. Artisan High Income |
| Dreyfus Municipal vs. Vanguard Total Stock | Dreyfus Municipal vs. Vanguard 500 Index | Dreyfus Municipal vs. Vanguard Total Stock | Dreyfus Municipal vs. Vanguard Total Stock |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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