Correlation Between Absolute Convertible and Dreyfus New

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

By analyzing existing cross correlation between Absolute Convertible Arbitrage and Dreyfus New York, you can compare the effects of market volatilities on Absolute Convertible and Dreyfus New 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 Absolute Convertible with a short position of Dreyfus New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Dreyfus New.

Diversification Opportunities for Absolute Convertible and Dreyfus New

0.53

Correlation Coefficient

Absolute Convertible  Dreyfus New

Very weak diversification

The 3 months correlation between Absolute and Dreyfus is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Dreyfus New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus New York and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Dreyfus New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus New York has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Dreyfus New go up and down completely randomly.

Pair Corralation between Absolute Convertible and Dreyfus New

If you would invest  1,023  in Absolute Convertible Arbitrage on September 26, 2024 and sell it today you would earn a total of  113.00  from holding Absolute Convertible Arbitrage or generate 11.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Absolute Convertible Arbitrage  vs.  Dreyfus New York

Absolute Convertible

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dreyfus New York

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Absolute Convertible and Dreyfus New

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

The idea behind Absolute Convertible Arbitrage and Dreyfus New York 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.