Correlation Between Dreyfus Technology and Davis New

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

By analyzing existing cross correlation between Dreyfus Technology Growth and Davis New York, you can compare the effects of market volatilities on Dreyfus Technology and Davis New 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 Technology with a short position of Davis New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Technology and Davis New.

Diversification Opportunities for Dreyfus Technology and Davis New

0.83

Correlation Coefficient

Dreyfus Technology  Davis New

Very poor diversification

The 3 months correlation between Dreyfus and Davis is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Technology Growth and Davis New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis New York and Dreyfus Technology 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 Technology Growth are associated (or correlated) with Davis New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis New York has no effect on the direction of Dreyfus Technology i.e., Dreyfus Technology and Davis New go up and down completely randomly.

Pair Corralation between Dreyfus Technology and Davis New

Assuming the 90 days horizon Dreyfus Technology Growth is expected to generate 0.66 times more return on investment than Davis New. However, Dreyfus Technology Growth is 1.51 times less risky than Davis New. It trades about 0.14 of its potential returns per unit of risk. Davis New York is currently generating about -0.03 per unit of risk. If you would invest  7,228  in Dreyfus Technology Growth on September 15, 2024 and sell it today you would earn a total of  739.00  from holding Dreyfus Technology Growth or generate 10.22% return on investment over 90 days.

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

Dreyfus Technology Growth  vs.  Davis New York

Dreyfus Technology Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Technology Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dreyfus Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Davis New York

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Davis New York has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Davis New 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 Technology and Davis New

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

The idea behind Dreyfus Technology Growth and Davis New York 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.