Correlation Between Dreyfus Sp and Dreyfus Smallcap

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

By analyzing existing cross correlation between Dreyfus Sp 500 and Dreyfus Smallcap Stock, you can compare the effects of market volatilities on Dreyfus Sp and Dreyfus Smallcap 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 Sp with a short position of Dreyfus Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Sp and Dreyfus Smallcap.

Diversification Opportunities for Dreyfus Sp and Dreyfus Smallcap

0.93

Correlation Coefficient

Dreyfus Sp  Dreyfus Smallcap

Almost no diversification

The 3 months correlation between Dreyfus and Dreyfus is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Sp 500 and Dreyfus Smallcap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Smallcap Stock and Dreyfus Sp 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 Sp 500 are associated (or correlated) with Dreyfus Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Smallcap Stock has no effect on the direction of Dreyfus Sp i.e., Dreyfus Sp and Dreyfus Smallcap go up and down completely randomly.

Pair Corralation between Dreyfus Sp and Dreyfus Smallcap

Assuming the 90 days horizon Dreyfus Sp is expected to generate 1.13 times less return on investment than Dreyfus Smallcap. But when comparing it to its historical volatility, Dreyfus Sp 500 is 1.83 times less risky than Dreyfus Smallcap. It trades about 0.19 of its potential returns per unit of risk. Dreyfus Smallcap Stock is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,758  in Dreyfus Smallcap Stock on September 14, 2024 and sell it today you would earn a total of  248.00  from holding Dreyfus Smallcap Stock or generate 8.99% return on investment over 90 days.

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

Dreyfus Sp 500  vs.  Dreyfus Smallcap Stock

Dreyfus Sp 500

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Sp 500 are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dreyfus Sp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dreyfus Smallcap Stock

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Smallcap Stock are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dreyfus Smallcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dreyfus Sp and Dreyfus Smallcap

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

The idea behind Dreyfus Sp 500 and Dreyfus Smallcap Stock 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.