Correlation Between Dreyfus Government and Maingate Mlp

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

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

Diversification Opportunities for Dreyfus Government and Maingate Mlp

0.41

Correlation Coefficient

Dreyfus Government  Maingate Mlp

Very weak diversification

The 3 months correlation between Dreyfus and Maingate is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Government Cash and Maingate Mlp Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maingate Mlp and Dreyfus Government 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 Government Cash are associated (or correlated) with Maingate Mlp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maingate Mlp has no effect on the direction of Dreyfus Government i.e., Dreyfus Government and Maingate Mlp go up and down completely randomly.

Pair Corralation between Dreyfus Government and Maingate Mlp

Assuming the 90 days horizon Dreyfus Government is expected to generate 11.49 times less return on investment than Maingate Mlp. In addition to that, Dreyfus Government is 1.5 times more volatile than Maingate Mlp Fund. It trades about 0.01 of its total potential returns per unit of risk. Maingate Mlp Fund is currently generating about 0.11 per unit of volatility. If you would invest  616.00  in Maingate Mlp Fund on September 21, 2024 and sell it today you would earn a total of  375.00  from holding Maingate Mlp Fund or generate 60.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.83%
Values	Daily Returns

Dreyfus Government Cash  vs.  Maingate Mlp Fund

Dreyfus Government Cash

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Government Cash are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dreyfus Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Maingate Mlp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maingate Mlp Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Maingate Mlp 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 Government and Maingate Mlp

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

The idea behind Dreyfus Government Cash and Maingate Mlp Fund 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.