Correlation Between Dreyfus Municipal and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Dreyfus Municipal and Lord Abbett 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 Municipal and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Municipal Bond and Lord Abbett Intermediate, you can compare the effects of market volatilities on Dreyfus Municipal and Lord Abbett 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 Municipal with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Municipal and Lord Abbett.
Diversification Opportunities for Dreyfus Municipal and Lord Abbett
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dreyfus and Lord is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Municipal Bond and Lord Abbett Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Intermediate and Dreyfus Municipal 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 Dreyfus Municipal Bond are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Intermediate has no effect on the direction of Dreyfus Municipal i.e., Dreyfus Municipal and Lord Abbett go up and down completely randomly.
Pair Corralation between Dreyfus Municipal and Lord Abbett
Assuming the 90 days horizon Dreyfus Municipal Bond is expected to generate 2.15 times more return on investment than Lord Abbett. However, Dreyfus Municipal is 2.15 times more volatile than Lord Abbett Intermediate. It trades about 0.68 of its potential returns per unit of risk. Lord Abbett Intermediate is currently generating about 0.37 per unit of risk. If you would invest 1,195 in Dreyfus Municipal Bond on November 9, 2024 and sell it today you would earn a total of 14.00 from holding Dreyfus Municipal Bond or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 25.0% |
| Values | Daily Returns |
Dreyfus Municipal Bond vs. Lord Abbett Intermediate
Performance |
| Timeline |
| Dreyfus Municipal Bond |
Risk-Adjusted Performance
Excellent
Weak | Strong |
| Lord Abbett Intermediate |
Dreyfus Municipal and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Municipal and Lord Abbett
The main advantage of trading using opposite Dreyfus Municipal and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Municipal position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett's long position.| Dreyfus Municipal vs. Vanguard Total Stock | Dreyfus Municipal vs. Vanguard 500 Index | Dreyfus Municipal vs. Vanguard Total Stock | Dreyfus Municipal vs. Vanguard Total Stock |
| Lord Abbett vs. Wealthbuilder Moderate Balanced | Lord Abbett vs. Columbia Moderate Growth | Lord Abbett vs. Transamerica Cleartrack Retirement | Lord Abbett vs. Calvert Moderate Allocation |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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