Correlation Between Dreyfus Midcap and Pro Blend

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

By analyzing existing cross correlation between Dreyfus Midcap Index and Pro Blend Maximum Term, you can compare the effects of market volatilities on Dreyfus Midcap and Pro Blend 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 Midcap with a short position of Pro Blend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Midcap and Pro Blend.

Diversification Opportunities for Dreyfus Midcap and Pro Blend

0.81

Correlation Coefficient

Dreyfus Midcap  Pro Blend

Very poor diversification

The 3 months correlation between Dreyfus and Pro is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Midcap Index and Pro Blend Maximum Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Blend Maximum and Dreyfus Midcap 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 Midcap Index are associated (or correlated) with Pro Blend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Blend Maximum has no effect on the direction of Dreyfus Midcap i.e., Dreyfus Midcap and Pro Blend go up and down completely randomly.

Pair Corralation between Dreyfus Midcap and Pro Blend

Assuming the 90 days horizon Dreyfus Midcap Index is expected to under-perform the Pro Blend. In addition to that, Dreyfus Midcap is 1.82 times more volatile than Pro Blend Maximum Term. It trades about -0.31 of its total potential returns per unit of risk. Pro Blend Maximum Term is currently generating about -0.28 per unit of volatility. If you would invest  2,748  in Pro Blend Maximum Term on October 9, 2024 and sell it today you would lose (220.00) from holding Pro Blend Maximum Term or give up 8.01% of portfolio value over 90 days.

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

Dreyfus Midcap Index  vs.  Pro Blend Maximum Term

Dreyfus Midcap Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus Midcap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pro Blend Maximum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pro Blend Maximum Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pro Blend 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 Midcap and Pro Blend

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

The idea behind Dreyfus Midcap Index and Pro Blend Maximum Term 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.