Correlation Between Western Asset and Dreyfus Global
Can any of the company-specific risk be diversified away by investing in both Western Asset and Dreyfus Global 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 Western Asset and Dreyfus Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Dreyfus Global Real, you can compare the effects of market volatilities on Western Asset and Dreyfus Global 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 Western Asset with a short position of Dreyfus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Dreyfus Global.
Diversification Opportunities for Western Asset and Dreyfus Global
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Dreyfus is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Dreyfus Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Global Real and Western Asset 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 Western Asset Diversified are associated (or correlated) with Dreyfus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Global Real has no effect on the direction of Western Asset i.e., Western Asset and Dreyfus Global go up and down completely randomly.
Pair Corralation between Western Asset and Dreyfus Global
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Dreyfus Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 1.26 times less risky than Dreyfus Global. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Dreyfus Global Real is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,502 in Dreyfus Global Real on September 13, 2024 and sell it today you would earn a total of 79.00 from holding Dreyfus Global Real or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Western Asset Diversified vs. Dreyfus Global Real
Performance |
| Timeline |
| Western Asset Diversified |
| Dreyfus Global Real |
Western Asset and Dreyfus Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Dreyfus Global
The main advantage of trading using opposite Western Asset and Dreyfus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Dreyfus Global 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 Global will offset losses from the drop in Dreyfus Global's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Dreyfus Global vs. Dreyfusstandish Global Fixed | Dreyfus Global vs. Dreyfusstandish Global Fixed | Dreyfus Global vs. Dreyfus High Yield | Dreyfus Global 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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