Correlation Between Capital Group and Dreyfus/standish

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

By analyzing existing cross correlation between Capital Group California and Dreyfusstandish Global Fixed, you can compare the effects of market volatilities on Capital Group and Dreyfus/standish 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 Capital Group with a short position of Dreyfus/standish. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Group and Dreyfus/standish.

Diversification Opportunities for Capital Group and Dreyfus/standish

0.83

Correlation Coefficient

Capital Group  Dreyfus/standish

Very poor diversification

The 3 months correlation between Capital and Dreyfus/standish is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group California and Dreyfusstandish Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfusstandish Global and Capital Group 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 Capital Group California are associated (or correlated) with Dreyfus/standish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfusstandish Global has no effect on the direction of Capital Group i.e., Capital Group and Dreyfus/standish go up and down completely randomly.

Pair Corralation between Capital Group and Dreyfus/standish

Assuming the 90 days horizon Capital Group is expected to generate 1.75 times less return on investment than Dreyfus/standish. But when comparing it to its historical volatility, Capital Group California is 3.15 times less risky than Dreyfus/standish. It trades about 0.17 of its potential returns per unit of risk. Dreyfusstandish Global Fixed is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,851  in Dreyfusstandish Global Fixed on October 5, 2024 and sell it today you would earn a total of  162.00  from holding Dreyfusstandish Global Fixed or generate 8.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.68%
Values	Daily Returns

Capital Group California  vs.  Dreyfusstandish Global Fixed

Capital Group California

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dreyfusstandish Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Capital Group and Dreyfus/standish

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

The idea behind Capital Group California and Dreyfusstandish Global Fixed 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.