Correlation Between Dreyfus Municipal and Dreyfus New
Can any of the company-specific risk be diversified away by investing in both Dreyfus Municipal and Dreyfus New 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 Dreyfus New 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 Dreyfus New York, you can compare the effects of market volatilities on Dreyfus Municipal and Dreyfus New 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 Dreyfus New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Municipal and Dreyfus New.
Diversification Opportunities for Dreyfus Municipal and Dreyfus New
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dreyfus and Dreyfus is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Municipal Bond and Dreyfus New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus New York 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 Dreyfus New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus New York has no effect on the direction of Dreyfus Municipal i.e., Dreyfus Municipal and Dreyfus New go up and down completely randomly.
Pair Corralation between Dreyfus Municipal and Dreyfus New
Assuming the 90 days horizon Dreyfus Municipal Bond is expected to generate 1.9 times more return on investment than Dreyfus New. However, Dreyfus Municipal is 1.9 times more volatile than Dreyfus New York. It trades about 0.08 of its potential returns per unit of risk. Dreyfus New York is currently generating about 0.11 per unit of risk. If you would invest 1,189 in Dreyfus Municipal Bond on September 2, 2024 and sell it today you would earn a total of 49.00 from holding Dreyfus Municipal Bond or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Municipal Bond vs. Dreyfus New York
Performance |
| Timeline |
| Dreyfus Municipal Bond |
| Dreyfus New York |
Dreyfus Municipal and Dreyfus New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Municipal and Dreyfus New
The main advantage of trading using opposite Dreyfus Municipal and Dreyfus New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Municipal position performs unexpectedly, Dreyfus New 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 New will offset losses from the drop in Dreyfus New'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 |
| Dreyfus New vs. Dreyfusstandish Global Fixed | Dreyfus New vs. Dreyfusstandish Global Fixed | Dreyfus New vs. Dreyfus High Yield | Dreyfus New vs. Dreyfus High Yield |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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