Correlation Between Dreyfus Strategic and Highland Long/short
Can any of the company-specific risk be diversified away by investing in both Dreyfus Strategic and Highland Long/short 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 Highland Long/short 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 Highland Longshort Healthcare, you can compare the effects of market volatilities on Dreyfus Strategic and Highland Long/short 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 Highland Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Strategic and Highland Long/short.
Diversification Opportunities for Dreyfus Strategic and Highland Long/short
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dreyfus and Highland is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Strategic Municipal and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Long/short 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 Highland Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Long/short has no effect on the direction of Dreyfus Strategic i.e., Dreyfus Strategic and Highland Long/short go up and down completely randomly.
Pair Corralation between Dreyfus Strategic and Highland Long/short
Assuming the 90 days horizon Dreyfus Strategic Municipal is expected to generate 2.85 times more return on investment than Highland Long/short. However, Dreyfus Strategic is 2.85 times more volatile than Highland Longshort Healthcare. It trades about 0.16 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.07 per unit of risk. If you would invest 674.00 in Dreyfus Strategic Municipal on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Dreyfus Strategic Municipal or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dreyfus Strategic Municipal vs. Highland Longshort Healthcare
Performance |
| Timeline |
| Dreyfus Strategic |
| Highland Long/short |
Dreyfus Strategic and Highland Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Strategic and Highland Long/short
The main advantage of trading using opposite Dreyfus Strategic and Highland Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Strategic position performs unexpectedly, Highland Long/short 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 Highland Long/short will offset losses from the drop in Highland Long/short'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 |
| Highland Long/short vs. Ab Value Fund | Highland Long/short vs. Bbh Partner Fund | Highland Long/short vs. Qs Large Cap | Highland Long/short vs. Western Asset Municipal |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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