Correlation Between Dreyfus New and Dreyfus Global

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

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

Diversification Opportunities for Dreyfus New and Dreyfus Global

0.22

Correlation Coefficient

Dreyfus New  Dreyfus Global

Modest diversification

The 3 months correlation between Dreyfus and Dreyfus is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus New York and Dreyfus Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Global Equity and Dreyfus New 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 New York are associated (or correlated) with Dreyfus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Global Equity has no effect on the direction of Dreyfus New i.e., Dreyfus New and Dreyfus Global go up and down completely randomly.

Pair Corralation between Dreyfus New and Dreyfus Global

Assuming the 90 days horizon Dreyfus New York is expected to under-perform the Dreyfus Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dreyfus New York is 3.14 times less risky than Dreyfus Global. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Dreyfus Global Equity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,160  in Dreyfus Global Equity on December 31, 2024 and sell it today you would earn a total of  98.00  from holding Dreyfus Global Equity or generate 8.45% return on investment over 90 days.

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

Dreyfus New York  vs.  Dreyfus Global Equity

Dreyfus New York

Risk-Adjusted Performance

Very Weak

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

Dreyfus Global Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Global Equity are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Dreyfus Global may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Dreyfus New and Dreyfus Global

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

The idea behind Dreyfus New York and Dreyfus Global Equity 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.