Correlation Between Dreyfus Institutional and Sterling Capital

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

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

Diversification Opportunities for Dreyfus Institutional and Sterling Capital

0.0

Correlation Coefficient

Dreyfus Institutional  Sterling Capital

Pay attention - limited upside

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

Pair Corralation between Dreyfus Institutional and Sterling Capital

If you would invest  826.00  in Sterling Capital Short on December 30, 2024 and sell it today you would earn a total of  12.00  from holding Sterling Capital Short or generate 1.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Dreyfus Institutional Reserves  vs.  Sterling Capital Short

Dreyfus Institutional

Risk-Adjusted Performance

Very Weak

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

Sterling Capital Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Short are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sterling Capital 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 Institutional and Sterling Capital

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

The idea behind Dreyfus Institutional Reserves and Sterling Capital Short 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.