Correlation Between Gurtin California and Dreyfus Bond

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

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

Diversification Opportunities for Gurtin California and Dreyfus Bond

0.8

Correlation Coefficient

Gurtin California  Dreyfus Bond

Very poor diversification

The 3 months correlation between Gurtin and Dreyfus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gurtin California Municipal and Dreyfus Bond Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Bond Market and Gurtin California 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 Gurtin California Municipal are associated (or correlated) with Dreyfus Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Bond Market has no effect on the direction of Gurtin California i.e., Gurtin California and Dreyfus Bond go up and down completely randomly.

Pair Corralation between Gurtin California and Dreyfus Bond

Assuming the 90 days horizon Gurtin California is expected to generate 22.33 times less return on investment than Dreyfus Bond. But when comparing it to its historical volatility, Gurtin California Municipal is 1.35 times less risky than Dreyfus Bond. It trades about 0.0 of its potential returns per unit of risk. Dreyfus Bond Market is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  883.00  in Dreyfus Bond Market on October 26, 2024 and sell it today you would earn a total of  1.00  from holding Dreyfus Bond Market or generate 0.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

Gurtin California Municipal  vs.  Dreyfus Bond Market

Gurtin California

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dreyfus Bond Market

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gurtin California and Dreyfus Bond

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

The idea behind Gurtin California Municipal and Dreyfus Bond Market 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.