Correlation Between Dreyfus/the Boston and Global Stock

Can any of the company-specific risk be diversified away by investing in both Dreyfus/the Boston and Global Stock 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 Global Stock 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 Global Stock Fund, you can compare the effects of market volatilities on Dreyfus/the Boston and Global Stock 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 Global Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus/the Boston and Global Stock.

Diversification Opportunities for Dreyfus/the Boston and Global Stock

0.83

Correlation Coefficient

Dreyfus/the Boston  Global Stock

Very poor diversification

The 3 months correlation between Dreyfus/the and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusthe Boston Pany and Global Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Stock 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 Global Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Stock has no effect on the direction of Dreyfus/the Boston i.e., Dreyfus/the Boston and Global Stock go up and down completely randomly.

Pair Corralation between Dreyfus/the Boston and Global Stock

Assuming the 90 days horizon Dreyfusthe Boston Pany is expected to under-perform the Global Stock. In addition to that, Dreyfus/the Boston is 3.93 times more volatile than Global Stock Fund. It trades about -0.29 of its total potential returns per unit of risk. Global Stock Fund is currently generating about -0.3 per unit of volatility. If you would invest  2,157  in Global Stock Fund on October 15, 2024 and sell it today you would lose (96.00) from holding Global Stock Fund or give up 4.45% of portfolio value over 90 days.

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

Dreyfusthe Boston Pany  vs.  Global Stock Fund

Dreyfusthe Boston Pany

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfusthe Boston Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Global Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Stock Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Global Stock 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 Global Stock

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

The idea behind Dreyfusthe Boston Pany and Global Stock Fund 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.

Check out your portfolio center.

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.