Correlation Between Vanguard Total and Dreyfus Municipal
Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Total 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 Total Stock and Dreyfus Municipal Bond, you can compare the effects of market volatilities on Vanguard Total 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 Total with a short position of Dreyfus Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Dreyfus Municipal.
Diversification Opportunities for Vanguard Total and Dreyfus Municipal
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Dreyfus is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock 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 Total 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 Total Stock 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 Total i.e., Vanguard Total and Dreyfus Municipal go up and down completely randomly.
Pair Corralation between Vanguard Total and Dreyfus Municipal
Assuming the 90 days horizon Vanguard Total Stock is expected to generate 1.38 times more return on investment than Dreyfus Municipal. However, Vanguard Total is 1.38 times more volatile than Dreyfus Municipal Bond. It trades about 0.17 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 13,788 in Vanguard Total Stock on August 29, 2024 and sell it today you would earn a total of 777.00 from holding Vanguard Total Stock or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Stock vs. Dreyfus Municipal Bond
Performance |
| Timeline |
| Vanguard Total Stock |
| Dreyfus Municipal Bond |
Vanguard Total and Dreyfus Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Dreyfus Municipal
The main advantage of trading using opposite Vanguard Total and Dreyfus Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard 500 Index | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Total Stock |
| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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