Correlation Between Bny Mellon and Dreyfus Strategic

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

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

Diversification Opportunities for Bny Mellon and Dreyfus Strategic

0.77

Correlation Coefficient

Bny Mellon  Dreyfus Strategic

Poor diversification

The 3 months correlation between Bny and Dreyfus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Strategic and Dreyfus Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Strategic and Bny Mellon 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 Bny Mellon Strategic are associated (or correlated) with Dreyfus Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Strategic has no effect on the direction of Bny Mellon i.e., Bny Mellon and Dreyfus Strategic go up and down completely randomly.

Pair Corralation between Bny Mellon and Dreyfus Strategic

Considering the 90-day investment horizon Bny Mellon Strategic is expected to under-perform the Dreyfus Strategic. In addition to that, Bny Mellon is 1.35 times more volatile than Dreyfus Strategic Municipal. It trades about -0.06 of its total potential returns per unit of risk. Dreyfus Strategic Municipal is currently generating about 0.03 per unit of volatility. If you would invest  688.00  in Dreyfus Strategic Municipal on September 12, 2024 and sell it today you would earn a total of  5.00  from holding Dreyfus Strategic Municipal or generate 0.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Bny Mellon Strategic  vs.  Dreyfus Strategic Municipal

Bny Mellon Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bny Mellon Strategic has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Bny Mellon is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Dreyfus Strategic

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Strategic Municipal are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Dreyfus Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bny Mellon and Dreyfus Strategic

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

The idea behind Bny Mellon Strategic and Dreyfus Strategic Municipal 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.