Correlation Between Mid-cap 15x and Dreyfus/standish

Can any of the company-specific risk be diversified away by investing in both Mid-cap 15x and Dreyfus/standish 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 Mid-cap 15x and Dreyfus/standish into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap 15x Strategy and Dreyfusstandish Global Fixed, you can compare the effects of market volatilities on Mid-cap 15x and Dreyfus/standish 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 Mid-cap 15x with a short position of Dreyfus/standish. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap 15x and Dreyfus/standish.

Diversification Opportunities for Mid-cap 15x and Dreyfus/standish

0.57

Correlation Coefficient

Mid-cap 15x  Dreyfus/standish

Very weak diversification

The 3 months correlation between Mid-cap and Dreyfus/standish is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Dreyfusstandish Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfusstandish Global and Mid-cap 15x 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 Mid Cap 15x Strategy are associated (or correlated) with Dreyfus/standish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfusstandish Global has no effect on the direction of Mid-cap 15x i.e., Mid-cap 15x and Dreyfus/standish go up and down completely randomly.

Pair Corralation between Mid-cap 15x and Dreyfus/standish

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 6.1 times more return on investment than Dreyfus/standish. However, Mid-cap 15x is 6.1 times more volatile than Dreyfusstandish Global Fixed. It trades about 0.04 of its potential returns per unit of risk. Dreyfusstandish Global Fixed is currently generating about 0.07 per unit of risk. If you would invest  11,038  in Mid Cap 15x Strategy on October 26, 2024 and sell it today you would earn a total of  3,071  from holding Mid Cap 15x Strategy or generate 27.82% return on investment over 90 days.

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

Mid Cap 15x Strategy  vs.  Dreyfusstandish Global Fixed

Mid Cap 15x

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap 15x Strategy are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Mid-cap 15x may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dreyfusstandish Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfusstandish Global Fixed are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dreyfus/standish is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid-cap 15x and Dreyfus/standish

The main advantage of trading using opposite Mid-cap 15x and Dreyfus/standish positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap 15x position performs unexpectedly, Dreyfus/standish 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/standish will offset losses from the drop in Dreyfus/standish's long position.

The idea behind Mid Cap 15x Strategy and Dreyfusstandish Global Fixed 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.