Correlation Between Dreyfus/newton International and Amcap Fund

Can any of the company-specific risk be diversified away by investing in both Dreyfus/newton International and Amcap Fund 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/newton International and Amcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dreyfusnewton International Equity and Amcap Fund Class, you can compare the effects of market volatilities on Dreyfus/newton International and Amcap Fund 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/newton International with a short position of Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus/newton International and Amcap Fund.

Diversification Opportunities for Dreyfus/newton International and Amcap Fund

0.46

Correlation Coefficient

Dreyfus/newton International  Amcap Fund

Very weak diversification

The 3 months correlation between Dreyfus/newton and Amcap is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusnewton International Eq and Amcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class and Dreyfus/newton International 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 Dreyfusnewton International Equity are associated (or correlated) with Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of Dreyfus/newton International i.e., Dreyfus/newton International and Amcap Fund go up and down completely randomly.

Pair Corralation between Dreyfus/newton International and Amcap Fund

Assuming the 90 days horizon Dreyfusnewton International Equity is expected to under-perform the Amcap Fund. In addition to that, Dreyfus/newton International is 4.29 times more volatile than Amcap Fund Class. It trades about -0.23 of its total potential returns per unit of risk. Amcap Fund Class is currently generating about -0.22 per unit of volatility. If you would invest  4,640  in Amcap Fund Class on October 4, 2024 and sell it today you would lose (368.00) from holding Amcap Fund Class or give up 7.93% of portfolio value over 90 days.

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

Dreyfusnewton International Eq  vs.  Amcap Fund Class

Dreyfus/newton International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfusnewton International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Amcap Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amcap Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Amcap Fund 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/newton International and Amcap Fund

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

The idea behind Dreyfusnewton International Equity and Amcap Fund Class 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.