Correlation Between Dreyfus Research and Fifth Third

Can any of the company-specific risk be diversified away by investing in both Dreyfus Research and Fifth Third 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 Fifth Third 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 Fifth Third Bancorp, you can compare the effects of market volatilities on Dreyfus Research and Fifth Third 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 Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Research and Fifth Third.

Diversification Opportunities for Dreyfus Research and Fifth Third

0.29

Correlation Coefficient

Dreyfus Research  Fifth Third

Modest diversification

The 3 months correlation between Dreyfus and Fifth is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Research Growth and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp 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 Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Dreyfus Research i.e., Dreyfus Research and Fifth Third go up and down completely randomly.

Pair Corralation between Dreyfus Research and Fifth Third

Assuming the 90 days horizon Dreyfus Research Growth is expected to generate 3.42 times more return on investment than Fifth Third. However, Dreyfus Research is 3.42 times more volatile than Fifth Third Bancorp. It trades about 0.06 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.1 per unit of risk. If you would invest  2,007  in Dreyfus Research Growth on October 5, 2024 and sell it today you would earn a total of  79.00  from holding Dreyfus Research Growth or generate 3.94% return on investment over 90 days.

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

Dreyfus Research Growth  vs.  Fifth Third Bancorp

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.

Fifth Third Bancorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fifth Third Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Fifth Third is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Dreyfus Research and Fifth Third

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

The idea behind Dreyfus Research Growth and Fifth Third Bancorp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.