Correlation Between Dreyfus Opportunistic and Nationwide Highmark

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

Diversification Opportunities for Dreyfus Opportunistic and Nationwide Highmark

0.88

Correlation Coefficient

Dreyfus Opportunistic  Nationwide Highmark

Very poor diversification

The 3 months correlation between Dreyfus and Nationwide is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Opportunistic Small and Nationwide Highmark Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Highmark Small 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 Nationwide Highmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Highmark Small has no effect on the direction of Dreyfus Opportunistic i.e., Dreyfus Opportunistic and Nationwide Highmark go up and down completely randomly.

Pair Corralation between Dreyfus Opportunistic and Nationwide Highmark

Assuming the 90 days horizon Dreyfus Opportunistic is expected to generate 1.01 times less return on investment than Nationwide Highmark. In addition to that, Dreyfus Opportunistic is 1.05 times more volatile than Nationwide Highmark Small. It trades about 0.03 of its total potential returns per unit of risk. Nationwide Highmark Small is currently generating about 0.03 per unit of volatility. If you would invest  2,681  in Nationwide Highmark Small on October 5, 2024 and sell it today you would earn a total of  372.00  from holding Nationwide Highmark Small or generate 13.88% return on investment over 90 days.

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

Dreyfus Opportunistic Small  vs.  Nationwide Highmark Small

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.

Nationwide Highmark Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dreyfus Opportunistic and Nationwide Highmark

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

The idea behind Dreyfus Opportunistic Small and Nationwide Highmark Small 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.