Correlation Between California High-yield and Dreyfus Natural
Can any of the company-specific risk be diversified away by investing in both California High-yield 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 California High-yield and Dreyfus Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Dreyfus Natural Resources, you can compare the effects of market volatilities on California High-yield 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 California High-yield with a short position of Dreyfus Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Dreyfus Natural.
Diversification Opportunities for California High-yield and Dreyfus Natural
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between California and Dreyfus is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa 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 California High-yield 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 California High Yield Municipal 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 California High-yield i.e., California High-yield and Dreyfus Natural go up and down completely randomly.
Pair Corralation between California High-yield and Dreyfus Natural
Assuming the 90 days horizon California High Yield Municipal is expected to generate 0.12 times more return on investment than Dreyfus Natural. However, California High Yield Municipal is 8.06 times less risky than Dreyfus Natural. It trades about -0.37 of its potential returns per unit of risk. Dreyfus Natural Resources is currently generating about -0.29 per unit of risk. If you would invest 998.00 in California High Yield Municipal on October 5, 2024 and sell it today you would lose (20.00) from holding California High Yield Municipal or give up 2.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
California High Yield Municipa vs. Dreyfus Natural Resources
Performance |
Timeline |
California High Yield |
Dreyfus Natural Resources |
California High-yield and Dreyfus Natural Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with California High-yield and Dreyfus Natural
The main advantage of trading using opposite California High-yield and Dreyfus Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield 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.California High-yield vs. Ab Impact Municipal | California High-yield vs. California Bond Fund | California High-yield vs. Ambrus Core Bond | California High-yield vs. Intermediate Term Bond Fund |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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