Correlation Between Dreyfus Technology and Cajxx

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

Diversification Opportunities for Dreyfus Technology and Cajxx

-0.64

Correlation Coefficient

Dreyfus Technology  Cajxx

Excellent diversification

The 3 months correlation between Dreyfus and Cajxx is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Technology Growth and Cajxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cajxx 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 Cajxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cajxx has no effect on the direction of Dreyfus Technology i.e., Dreyfus Technology and Cajxx go up and down completely randomly.

Pair Corralation between Dreyfus Technology and Cajxx

Assuming the 90 days horizon Dreyfus Technology is expected to generate 731.99 times less return on investment than Cajxx. But when comparing it to its historical volatility, Dreyfus Technology Growth is 56.85 times less risky than Cajxx. It trades about 0.01 of its potential returns per unit of risk. Cajxx is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Cajxx on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Cajxx or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

Dreyfus Technology Growth  vs.  Cajxx

Dreyfus Technology Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Technology Growth are ranked lower than 7 (%) 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.

Cajxx

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cajxx are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cajxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dreyfus Technology and Cajxx

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

The idea behind Dreyfus Technology Growth and Cajxx 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.