Correlation Between Dreyfus Municipal and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both Dreyfus Municipal and Neuberger Berman 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 Neuberger Berman 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 Neuberger Berman Real, you can compare the effects of market volatilities on Dreyfus Municipal and Neuberger Berman 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 Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Municipal and Neuberger Berman.
Diversification Opportunities for Dreyfus Municipal and Neuberger Berman
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dreyfus and Neuberger is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Municipal Bond and Neuberger Berman Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Real 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 Neuberger Berman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuberger Berman Real has no effect on the direction of Dreyfus Municipal i.e., Dreyfus Municipal and Neuberger Berman go up and down completely randomly.
Pair Corralation between Dreyfus Municipal and Neuberger Berman
Assuming the 90 days horizon Dreyfus Municipal Bond is expected to generate 0.4 times more return on investment than Neuberger Berman. However, Dreyfus Municipal Bond is 2.49 times less risky than Neuberger Berman. It trades about -0.33 of its potential returns per unit of risk. Neuberger Berman Real is currently generating about -0.3 per unit of risk. If you would invest 1,242 in Dreyfus Municipal Bond on October 9, 2024 and sell it today you would lose (40.00) from holding Dreyfus Municipal Bond or give up 3.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Municipal Bond vs. Neuberger Berman Real
Performance |
| Timeline |
| Dreyfus Municipal Bond |
| Neuberger Berman Real |
Dreyfus Municipal and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Municipal and Neuberger Berman
The main advantage of trading using opposite Dreyfus Municipal and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Municipal position performs unexpectedly, Neuberger Berman 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 Neuberger Berman will offset losses from the drop in Neuberger Berman'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 |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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