Correlation Between Permanent Portfolio and Dreyfus Balanced

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Can any of the company-specific risk be diversified away by investing in both Permanent Portfolio and Dreyfus Balanced 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 Permanent Portfolio and Dreyfus Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Permanent Portfolio Class and Dreyfus Balanced Opportunity, you can compare the effects of market volatilities on Permanent Portfolio and Dreyfus Balanced 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 Permanent Portfolio with a short position of Dreyfus Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permanent Portfolio and Dreyfus Balanced.

Diversification Opportunities for Permanent Portfolio and Dreyfus Balanced

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Permanent and Dreyfus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Permanent Portfolio Class and Dreyfus Balanced Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Balanced Opp and Permanent Portfolio 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 Permanent Portfolio Class are associated (or correlated) with Dreyfus Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Balanced Opp has no effect on the direction of Permanent Portfolio i.e., Permanent Portfolio and Dreyfus Balanced go up and down completely randomly.

Pair Corralation between Permanent Portfolio and Dreyfus Balanced

Assuming the 90 days horizon Permanent Portfolio Class is expected to generate 1.34 times more return on investment than Dreyfus Balanced. However, Permanent Portfolio is 1.34 times more volatile than Dreyfus Balanced Opportunity. It trades about 0.1 of its potential returns per unit of risk. Dreyfus Balanced Opportunity is currently generating about 0.13 per unit of risk. If you would invest  5,948  in Permanent Portfolio Class on September 15, 2024 and sell it today you would earn a total of  220.00  from holding Permanent Portfolio Class or generate 3.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.46%
ValuesDaily Returns

Permanent Portfolio Class  vs.  Dreyfus Balanced Opportunity

 Performance 
       Timeline  
Permanent Portfolio Class 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Permanent Portfolio Class are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Permanent Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Dreyfus Balanced Opp 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Balanced Opportunity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Dreyfus Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Permanent Portfolio and Dreyfus Balanced Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Permanent Portfolio and Dreyfus Balanced

The main advantage of trading using opposite Permanent Portfolio and Dreyfus Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permanent Portfolio position performs unexpectedly, Dreyfus Balanced 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 Balanced will offset losses from the drop in Dreyfus Balanced's long position.
The idea behind Permanent Portfolio Class and Dreyfus Balanced Opportunity 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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