Correlation Between Dreyfus Natural and Catalyst Mlp

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

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

Diversification Opportunities for Dreyfus Natural and Catalyst Mlp

-0.05

Correlation Coefficient

Dreyfus Natural  Catalyst Mlp

Good diversification

The 3 months correlation between Dreyfus and Catalyst is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Natural Resources and Catalyst Mlp Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Mlp Infrast and Dreyfus Natural 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 Natural Resources are associated (or correlated) with Catalyst Mlp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Mlp Infrast has no effect on the direction of Dreyfus Natural i.e., Dreyfus Natural and Catalyst Mlp go up and down completely randomly.

Pair Corralation between Dreyfus Natural and Catalyst Mlp

Assuming the 90 days horizon Dreyfus Natural Resources is expected to under-perform the Catalyst Mlp. In addition to that, Dreyfus Natural is 1.24 times more volatile than Catalyst Mlp Infrastructure. It trades about -0.14 of its total potential returns per unit of risk. Catalyst Mlp Infrastructure is currently generating about 0.15 per unit of volatility. If you would invest  2,723  in Catalyst Mlp Infrastructure on October 6, 2024 and sell it today you would earn a total of  233.00  from holding Catalyst Mlp Infrastructure or generate 8.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Dreyfus Natural Resources  vs.  Catalyst Mlp Infrastructure

Dreyfus Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus Natural Resources 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 basic 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.

Catalyst Mlp Infrast

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Mlp Infrastructure are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal forward indicators, Catalyst Mlp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dreyfus Natural and Catalyst Mlp

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

The idea behind Dreyfus Natural Resources and Catalyst Mlp Infrastructure 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.