Correlation Between Dreyfus Strategic and Gotham Enhanced
Can any of the company-specific risk be diversified away by investing in both Dreyfus Strategic and Gotham Enhanced 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 Gotham Enhanced 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 Gotham Enhanced Sp, you can compare the effects of market volatilities on Dreyfus Strategic and Gotham Enhanced 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 Gotham Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Strategic and Gotham Enhanced.
Diversification Opportunities for Dreyfus Strategic and Gotham Enhanced
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dreyfus and Gotham is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Strategic Municipal and Gotham Enhanced Sp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Enhanced Sp 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 Gotham Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Enhanced Sp has no effect on the direction of Dreyfus Strategic i.e., Dreyfus Strategic and Gotham Enhanced go up and down completely randomly.
Pair Corralation between Dreyfus Strategic and Gotham Enhanced
Assuming the 90 days horizon Dreyfus Strategic is expected to generate 7.04 times less return on investment than Gotham Enhanced. But when comparing it to its historical volatility, Dreyfus Strategic Municipal is 1.46 times less risky than Gotham Enhanced. It trades about 0.03 of its potential returns per unit of risk. Gotham Enhanced Sp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,440 in Gotham Enhanced Sp on September 2, 2024 and sell it today you would earn a total of 595.00 from holding Gotham Enhanced Sp or generate 41.32% 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. Gotham Enhanced Sp
Performance |
| Timeline |
| Dreyfus Strategic |
| Gotham Enhanced Sp |
Dreyfus Strategic and Gotham Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Strategic and Gotham Enhanced
The main advantage of trading using opposite Dreyfus Strategic and Gotham Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Strategic position performs unexpectedly, Gotham Enhanced 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 Gotham Enhanced will offset losses from the drop in Gotham Enhanced'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 |
| Gotham Enhanced vs. Aqr Diversified Arbitrage | Gotham Enhanced vs. Adams Diversified Equity | Gotham Enhanced vs. Pioneer Diversified High | Gotham Enhanced vs. Massmutual Premier Diversified |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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