Correlation Between Dreyfusnewton International and Ave Maria

Can any of the company-specific risk be diversified away by investing in both Dreyfusnewton International and Ave Maria 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 Dreyfusnewton International and Ave Maria 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 Ave Maria Bond, you can compare the effects of market volatilities on Dreyfusnewton International and Ave Maria 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 Dreyfusnewton International with a short position of Ave Maria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfusnewton International and Ave Maria.

Diversification Opportunities for Dreyfusnewton International and Ave Maria

-0.17

Correlation Coefficient

Dreyfusnewton International  Ave Maria

Good diversification

The 3 months correlation between Dreyfusnewton and Ave is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusnewton International Eq and Ave Maria Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ave Maria Bond and Dreyfusnewton 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 Ave Maria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ave Maria Bond has no effect on the direction of Dreyfusnewton International i.e., Dreyfusnewton International and Ave Maria go up and down completely randomly.

Pair Corralation between Dreyfusnewton International and Ave Maria

Assuming the 90 days horizon Dreyfusnewton International Equity is expected to generate 2.87 times more return on investment than Ave Maria. However, Dreyfusnewton International is 2.87 times more volatile than Ave Maria Bond. It trades about 0.26 of its potential returns per unit of risk. Ave Maria Bond is currently generating about -0.05 per unit of risk. If you would invest  2,146  in Dreyfusnewton International Equity on September 14, 2024 and sell it today you would earn a total of  70.00  from holding Dreyfusnewton International Equity or generate 3.26% return on investment over 90 days.

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

Dreyfusnewton International Eq  vs.  Ave Maria Bond

Dreyfusnewton 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 fairly strong basic indicators, Dreyfusnewton International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ave Maria Bond

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Dreyfusnewton International and Ave Maria

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

The idea behind Dreyfusnewton International Equity and Ave Maria Bond 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.