Correlation Between Dreyfus Strategic and Pinnacle Sherman
Can any of the company-specific risk be diversified away by investing in both Dreyfus Strategic and Pinnacle Sherman 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 Strategic and Pinnacle Sherman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Strategic Municipal and Pinnacle Sherman Multi Strategy, you can compare the effects of market volatilities on Dreyfus Strategic and Pinnacle Sherman 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 Strategic with a short position of Pinnacle Sherman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Strategic and Pinnacle Sherman.
Diversification Opportunities for Dreyfus Strategic and Pinnacle Sherman
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dreyfus and Pinnacle is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Strategic Municipal and Pinnacle Sherman Multi Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Sherman Multi and Dreyfus Strategic 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 Strategic Municipal are associated (or correlated) with Pinnacle Sherman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Sherman Multi has no effect on the direction of Dreyfus Strategic i.e., Dreyfus Strategic and Pinnacle Sherman go up and down completely randomly.
Pair Corralation between Dreyfus Strategic and Pinnacle Sherman
Assuming the 90 days horizon Dreyfus Strategic is expected to generate 8.89 times less return on investment than Pinnacle Sherman. But when comparing it to its historical volatility, Dreyfus Strategic Municipal is 2.21 times less risky than Pinnacle Sherman. It trades about 0.02 of its potential returns per unit of risk. Pinnacle Sherman Multi Strategy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,263 in Pinnacle Sherman Multi Strategy on August 27, 2024 and sell it today you would earn a total of 167.00 from holding Pinnacle Sherman Multi Strategy or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Strategic Municipal vs. Pinnacle Sherman Multi Strateg
Performance |
| Timeline |
| Dreyfus Strategic |
| Pinnacle Sherman Multi |
Dreyfus Strategic and Pinnacle Sherman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Strategic and Pinnacle Sherman
The main advantage of trading using opposite Dreyfus Strategic and Pinnacle Sherman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Strategic position performs unexpectedly, Pinnacle Sherman 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 Pinnacle Sherman will offset losses from the drop in Pinnacle Sherman's long position.| Dreyfus Strategic vs. Vanguard Total Stock | Dreyfus Strategic vs. Vanguard 500 Index | Dreyfus Strategic vs. Vanguard Total Stock | Dreyfus Strategic vs. Vanguard Total Stock |
| Pinnacle Sherman vs. Champlain Small | Pinnacle Sherman vs. Nationwide Small Cap | Pinnacle Sherman vs. Ab Small Cap | Pinnacle Sherman vs. Ab Small Cap |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |