Correlation Between Columbia Real and Dreyfus International

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

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

Diversification Opportunities for Columbia Real and Dreyfus International

0.5

Correlation Coefficient

Columbia Real  Dreyfus International

Very weak diversification

The 3 months correlation between Columbia and Dreyfus is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Real Estate and Dreyfus International Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus International and Columbia Real 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 Columbia Real Estate are associated (or correlated) with Dreyfus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus International has no effect on the direction of Columbia Real i.e., Columbia Real and Dreyfus International go up and down completely randomly.

Pair Corralation between Columbia Real and Dreyfus International

Assuming the 90 days horizon Columbia Real is expected to generate 2.44 times less return on investment than Dreyfus International. In addition to that, Columbia Real is 2.67 times more volatile than Dreyfus International Bond. It trades about 0.02 of its total potential returns per unit of risk. Dreyfus International Bond is currently generating about 0.1 per unit of volatility. If you would invest  1,231  in Dreyfus International Bond on December 29, 2024 and sell it today you would earn a total of  32.00  from holding Dreyfus International Bond or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Columbia Real Estate  vs.  Dreyfus International Bond

Columbia Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Real Estate are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus International Bond are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dreyfus International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Real and Dreyfus International

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

The idea behind Columbia Real Estate and Dreyfus International Bond 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.