Correlation Between Dreyfus Research and Century Petroleum

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

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

Diversification Opportunities for Dreyfus Research and Century Petroleum

0.0

Correlation Coefficient

Dreyfus Research  Century Petroleum

Pay attention - limited upside

The 3 months correlation between Dreyfus and Century is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Research Growth and Century Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Petroleum Corp and Dreyfus Research 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 Research Growth are associated (or correlated) with Century Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Petroleum Corp has no effect on the direction of Dreyfus Research i.e., Dreyfus Research and Century Petroleum go up and down completely randomly.

Pair Corralation between Dreyfus Research and Century Petroleum

Assuming the 90 days horizon Dreyfus Research is expected to generate 20.13 times less return on investment than Century Petroleum. But when comparing it to its historical volatility, Dreyfus Research Growth is 43.53 times less risky than Century Petroleum. It trades about 0.09 of its potential returns per unit of risk. Century Petroleum Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Century Petroleum Corp on October 5, 2024 and sell it today you would lose (0.01) from holding Century Petroleum Corp or give up 90.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dreyfus Research Growth  vs.  Century Petroleum Corp

Dreyfus Research Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Research Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dreyfus Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Century Petroleum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Century Petroleum is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dreyfus Research and Century Petroleum

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

The idea behind Dreyfus Research Growth and Century Petroleum Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.