Correlation Between Dreyfus Technology and Pgim Jennison

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

Diversification Opportunities for Dreyfus Technology and Pgim Jennison

0.6

Correlation Coefficient

Dreyfus Technology  Pgim Jennison

Poor diversification

The 3 months correlation between Dreyfus and PGIM is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Technology Growth and Pgim Jennison Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Technology 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 Pgim Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Jennison Technology has no effect on the direction of Dreyfus Technology i.e., Dreyfus Technology and Pgim Jennison go up and down completely randomly.

Pair Corralation between Dreyfus Technology and Pgim Jennison

Assuming the 90 days horizon Dreyfus Technology Growth is expected to generate 0.81 times more return on investment than Pgim Jennison. However, Dreyfus Technology Growth is 1.24 times less risky than Pgim Jennison. It trades about -0.05 of its potential returns per unit of risk. Pgim Jennison Technology is currently generating about -0.07 per unit of risk. If you would invest  8,066  in Dreyfus Technology Growth on November 28, 2024 and sell it today you would lose (348.00) from holding Dreyfus Technology Growth or give up 4.31% of portfolio value over 90 days.

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

Dreyfus Technology Growth  vs.  Pgim Jennison Technology

Dreyfus Technology Growth

Risk-Adjusted Performance

Very Weak

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

Pgim Jennison Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pgim Jennison Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Technology and Pgim Jennison

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

The idea behind Dreyfus Technology Growth and Pgim Jennison Technology 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.