Correlation Between Dreyfus Opportunistic and Dreyfus Institutional

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

By analyzing existing cross correlation between Dreyfus Opportunistic Small and Dreyfus Institutional Sp, you can compare the effects of market volatilities on Dreyfus Opportunistic and Dreyfus Institutional 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 Opportunistic with a short position of Dreyfus Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Opportunistic and Dreyfus Institutional.

Diversification Opportunities for Dreyfus Opportunistic and Dreyfus Institutional

0.65

Correlation Coefficient

Dreyfus Opportunistic  Dreyfus Institutional

Poor diversification

The 3 months correlation between Dreyfus and Dreyfus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Opportunistic Small and Dreyfus Institutional Sp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Institutional and Dreyfus Opportunistic 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 Opportunistic Small are associated (or correlated) with Dreyfus Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Institutional has no effect on the direction of Dreyfus Opportunistic i.e., Dreyfus Opportunistic and Dreyfus Institutional go up and down completely randomly.

Pair Corralation between Dreyfus Opportunistic and Dreyfus Institutional

Assuming the 90 days horizon Dreyfus Opportunistic Small is expected to under-perform the Dreyfus Institutional. In addition to that, Dreyfus Opportunistic is 1.25 times more volatile than Dreyfus Institutional Sp. It trades about -0.44 of its total potential returns per unit of risk. Dreyfus Institutional Sp is currently generating about -0.05 per unit of volatility. If you would invest  6,558  in Dreyfus Institutional Sp on September 24, 2024 and sell it today you would lose (55.00) from holding Dreyfus Institutional Sp or give up 0.84% of portfolio value over 90 days.

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

Dreyfus Opportunistic Small  vs.  Dreyfus Institutional Sp

Dreyfus Opportunistic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus Opportunistic Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dreyfus Opportunistic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus Institutional

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Dreyfus Institutional Sp 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 forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Dreyfus Opportunistic and Dreyfus Institutional

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

The idea behind Dreyfus Opportunistic Small and Dreyfus Institutional Sp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.