Correlation Between Extended Market and Dreyfus Equity
Can any of the company-specific risk be diversified away by investing in both Extended Market and Dreyfus Equity 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 Extended Market and Dreyfus Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Dreyfus Equity Income, you can compare the effects of market volatilities on Extended Market and Dreyfus Equity 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 Extended Market with a short position of Dreyfus Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Dreyfus Equity.
Diversification Opportunities for Extended Market and Dreyfus Equity
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Extended and Dreyfus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Dreyfus Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Equity Income and Extended Market 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 Extended Market Index are associated (or correlated) with Dreyfus Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Equity Income has no effect on the direction of Extended Market i.e., Extended Market and Dreyfus Equity go up and down completely randomly.
Pair Corralation between Extended Market and Dreyfus Equity
Assuming the 90 days horizon Extended Market Index is expected to generate 1.18 times more return on investment than Dreyfus Equity. However, Extended Market is 1.18 times more volatile than Dreyfus Equity Income. It trades about 0.14 of its potential returns per unit of risk. Dreyfus Equity Income is currently generating about 0.12 per unit of risk. If you would invest 2,080 in Extended Market Index on October 25, 2024 and sell it today you would earn a total of 49.00 from holding Extended Market Index or generate 2.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Extended Market Index vs. Dreyfus Equity Income
Performance |
Timeline |
Extended Market Index |
Dreyfus Equity Income |
Extended Market and Dreyfus Equity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Extended Market and Dreyfus Equity
The main advantage of trading using opposite Extended Market and Dreyfus Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Dreyfus Equity 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 Equity will offset losses from the drop in Dreyfus Equity's long position.Extended Market vs. Victory High Yield | Extended Market vs. Strategic Advisers Income | Extended Market vs. Voya High Yield | Extended Market vs. Msift High Yield |
Dreyfus Equity vs. Lord Abbett Health | Dreyfus Equity vs. Baron Health Care | Dreyfus Equity vs. Tekla Healthcare Investors | Dreyfus Equity vs. Blackrock Health Sciences |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum |