Correlation Between Jhancock Real and Dreyfus Active

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

By analyzing existing cross correlation between Jhancock Real Estate and Dreyfus Active Midcap, you can compare the effects of market volatilities on Jhancock Real and Dreyfus Active 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 Jhancock Real with a short position of Dreyfus Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Real and Dreyfus Active.

Diversification Opportunities for Jhancock Real and Dreyfus Active

0.69

Correlation Coefficient

Jhancock Real  Dreyfus Active

Poor diversification

The 3 months correlation between Jhancock and Dreyfus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Real Estate and Dreyfus Active Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Active Midcap and Jhancock Real 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 Jhancock Real Estate are associated (or correlated) with Dreyfus Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Active Midcap has no effect on the direction of Jhancock Real i.e., Jhancock Real and Dreyfus Active go up and down completely randomly.

Pair Corralation between Jhancock Real and Dreyfus Active

Assuming the 90 days horizon Jhancock Real is expected to generate 1.0 times less return on investment than Dreyfus Active. In addition to that, Jhancock Real is 1.09 times more volatile than Dreyfus Active Midcap. It trades about 0.04 of its total potential returns per unit of risk. Dreyfus Active Midcap is currently generating about 0.04 per unit of volatility. If you would invest  4,282  in Dreyfus Active Midcap on September 25, 2024 and sell it today you would earn a total of  867.00  from holding Dreyfus Active Midcap or generate 20.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Jhancock Real Estate  vs.  Dreyfus Active Midcap

Jhancock Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jhancock Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Dreyfus Active Midcap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jhancock Real and Dreyfus Active

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

The idea behind Jhancock Real Estate and Dreyfus Active Midcap 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.