Correlation Between Dreyfus/the Boston and Gold Bullion

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

By analyzing existing cross correlation between Dreyfusthe Boston Pany and The Gold Bullion, you can compare the effects of market volatilities on Dreyfus/the Boston and Gold Bullion 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/the Boston with a short position of Gold Bullion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus/the Boston and Gold Bullion.

Diversification Opportunities for Dreyfus/the Boston and Gold Bullion

0.33

Correlation Coefficient

Dreyfus/the Boston  Gold Bullion

Weak diversification

The 3 months correlation between Dreyfus/the and Gold is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusthe Boston Pany and The Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion and Dreyfus/the Boston 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 Dreyfusthe Boston Pany are associated (or correlated) with Gold Bullion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion has no effect on the direction of Dreyfus/the Boston i.e., Dreyfus/the Boston and Gold Bullion go up and down completely randomly.

Pair Corralation between Dreyfus/the Boston and Gold Bullion

Assuming the 90 days horizon Dreyfusthe Boston Pany is expected to generate 1.08 times more return on investment than Gold Bullion. However, Dreyfus/the Boston is 1.08 times more volatile than The Gold Bullion. It trades about 0.27 of its potential returns per unit of risk. The Gold Bullion is currently generating about 0.1 per unit of risk. If you would invest  2,532  in Dreyfusthe Boston Pany on September 2, 2024 and sell it today you would earn a total of  514.00  from holding Dreyfusthe Boston Pany or generate 20.3% return on investment over 90 days.

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

Dreyfusthe Boston Pany  vs.  The Gold Bullion

Dreyfusthe Boston Pany

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfusthe Boston Pany are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Dreyfus/the Boston showed solid returns over the last few months and may actually be approaching a breakup point.

Gold Bullion

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Dreyfus/the Boston and Gold Bullion

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

The idea behind Dreyfusthe Boston Pany and The Gold Bullion 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.