Correlation Between Dreyfus Appreciation and Dreyfus Technology

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

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

Diversification Opportunities for Dreyfus Appreciation and Dreyfus Technology

0.38

Correlation Coefficient

Dreyfus Appreciation  Dreyfus Technology

Weak diversification

The 3 months correlation between Dreyfus and Dreyfus is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Appreciation Fund and Dreyfus Technology Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Technology Growth and Dreyfus Appreciation 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 Dreyfus Appreciation Fund are associated (or correlated) with Dreyfus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Technology Growth has no effect on the direction of Dreyfus Appreciation i.e., Dreyfus Appreciation and Dreyfus Technology go up and down completely randomly.

Pair Corralation between Dreyfus Appreciation and Dreyfus Technology

Assuming the 90 days horizon Dreyfus Appreciation Fund is expected to under-perform the Dreyfus Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dreyfus Appreciation Fund is 1.14 times less risky than Dreyfus Technology. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Dreyfus Technology Growth is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,208  in Dreyfus Technology Growth on October 13, 2024 and sell it today you would earn a total of  53.00  from holding Dreyfus Technology Growth or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dreyfus Appreciation Fund  vs.  Dreyfus Technology Growth

Dreyfus Appreciation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus Appreciation Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Dreyfus Technology Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dreyfus Appreciation and Dreyfus Technology

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

The idea behind Dreyfus Appreciation Fund and Dreyfus Technology Growth 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.