Correlation Between Dreyfus High and Dreyfus Institutional

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

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

Diversification Opportunities for Dreyfus High and Dreyfus Institutional

0.23

Correlation Coefficient

Dreyfus High  Dreyfus Institutional

Modest diversification

The 3 months correlation between Dreyfus and Dreyfus is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus High Yield and Dreyfus Institutional Sp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Institutional and Dreyfus High 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 High Yield are associated (or correlated) with Dreyfus Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Institutional has no effect on the direction of Dreyfus High i.e., Dreyfus High and Dreyfus Institutional go up and down completely randomly.

Pair Corralation between Dreyfus High and Dreyfus Institutional

Assuming the 90 days horizon Dreyfus High is expected to generate 3.52 times less return on investment than Dreyfus Institutional. But when comparing it to its historical volatility, Dreyfus High Yield is 3.47 times less risky than Dreyfus Institutional. It trades about 0.04 of its potential returns per unit of risk. Dreyfus Institutional Sp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,105  in Dreyfus Institutional Sp on September 25, 2024 and sell it today you would earn a total of  1,072  from holding Dreyfus Institutional Sp or generate 26.11% return on investment over 90 days.

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

Dreyfus High Yield  vs.  Dreyfus Institutional Sp

Dreyfus High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dreyfus Institutional

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus Institutional Sp 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 forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Dreyfus High and Dreyfus Institutional

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

The idea behind Dreyfus High Yield and Dreyfus Institutional Sp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.