Correlation Between Dreyfusthe Boston and Dreyfus Municipal

Can any of the company-specific risk be diversified away by investing in both Dreyfusthe Boston and Dreyfus Municipal 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 Dreyfusthe Boston and Dreyfus Municipal 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 Dreyfus Municipal Bond, you can compare the effects of market volatilities on Dreyfusthe Boston and Dreyfus Municipal 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 Dreyfusthe Boston with a short position of Dreyfus Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfusthe Boston and Dreyfus Municipal.

Diversification Opportunities for Dreyfusthe Boston and Dreyfus Municipal

0.19

Correlation Coefficient

Dreyfusthe Boston  Dreyfus Municipal

Average diversification

The 3 months correlation between Dreyfusthe and Dreyfus is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusthe Boston Pany and Dreyfus Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipal Bond and Dreyfusthe 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 Dreyfus Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipal Bond has no effect on the direction of Dreyfusthe Boston i.e., Dreyfusthe Boston and Dreyfus Municipal go up and down completely randomly.

Pair Corralation between Dreyfusthe Boston and Dreyfus Municipal

Assuming the 90 days horizon Dreyfusthe Boston Pany is expected to generate 4.97 times more return on investment than Dreyfus Municipal. However, Dreyfusthe Boston is 4.97 times more volatile than Dreyfus Municipal Bond. It trades about 0.05 of its potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about 0.07 per unit of risk. If you would invest  3,121  in Dreyfusthe Boston Pany on September 23, 2024 and sell it today you would earn a total of  973.00  from holding Dreyfusthe Boston Pany or generate 31.18% return on investment over 90 days.

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

Dreyfusthe Boston Pany  vs.  Dreyfus Municipal Bond

Dreyfusthe Boston Pany

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfusthe Boston Pany are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dreyfusthe Boston may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dreyfus Municipal Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dreyfusthe Boston and Dreyfus Municipal

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

The idea behind Dreyfusthe Boston Pany and Dreyfus Municipal Bond 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.