Correlation Between Alger International and Dreyfus Natural

Can any of the company-specific risk be diversified away by investing in both Alger International and Dreyfus Natural 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 Alger International and Dreyfus Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alger International Growth and Dreyfus Natural Resources, you can compare the effects of market volatilities on Alger International and Dreyfus Natural 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 Alger International with a short position of Dreyfus Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger International and Dreyfus Natural.

Diversification Opportunities for Alger International and Dreyfus Natural

-0.13

Correlation Coefficient

Alger International  Dreyfus Natural

Good diversification

The 3 months correlation between Alger and Dreyfus is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Alger International Growth and Dreyfus Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Natural Resources and Alger International 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 Alger International Growth are associated (or correlated) with Dreyfus Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Natural Resources has no effect on the direction of Alger International i.e., Alger International and Dreyfus Natural go up and down completely randomly.

Pair Corralation between Alger International and Dreyfus Natural

Assuming the 90 days horizon Alger International Growth is expected to generate 0.48 times more return on investment than Dreyfus Natural. However, Alger International Growth is 2.1 times less risky than Dreyfus Natural. It trades about 0.0 of its potential returns per unit of risk. Dreyfus Natural Resources is currently generating about -0.02 per unit of risk. If you would invest  2,058  in Alger International Growth on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Alger International Growth or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alger International Growth  vs.  Dreyfus Natural Resources

Alger International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alger International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Alger International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Dreyfus Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alger International and Dreyfus Natural

The main advantage of trading using opposite Alger International and Dreyfus Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger International position performs unexpectedly, Dreyfus Natural 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 Natural will offset losses from the drop in Dreyfus Natural's long position.

The idea behind Alger International Growth and Dreyfus Natural Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.