Correlation Between Virtus Nfj and Dreyfus High

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

By analyzing existing cross correlation between Virtus Nfj Large Cap and Dreyfus High Yield, you can compare the effects of market volatilities on Virtus Nfj and Dreyfus High 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 Virtus Nfj with a short position of Dreyfus High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Nfj and Dreyfus High.

Diversification Opportunities for Virtus Nfj and Dreyfus High

0.67

Correlation Coefficient

Virtus Nfj  Dreyfus High

Poor diversification

The 3 months correlation between Virtus and Dreyfus is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Nfj Large Cap and Dreyfus High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus High Yield and Virtus Nfj 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 Virtus Nfj Large Cap are associated (or correlated) with Dreyfus High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus High Yield has no effect on the direction of Virtus Nfj i.e., Virtus Nfj and Dreyfus High go up and down completely randomly.

Pair Corralation between Virtus Nfj and Dreyfus High

Assuming the 90 days horizon Virtus Nfj Large Cap is expected to generate 2.56 times more return on investment than Dreyfus High. However, Virtus Nfj is 2.56 times more volatile than Dreyfus High Yield. It trades about 0.07 of its potential returns per unit of risk. Dreyfus High Yield is currently generating about 0.09 per unit of risk. If you would invest  2,340  in Virtus Nfj Large Cap on October 5, 2024 and sell it today you would earn a total of  411.00  from holding Virtus Nfj Large Cap or generate 17.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.68%
Values	Daily Returns

Virtus Nfj Large Cap  vs.  Dreyfus High Yield

Virtus Nfj Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Nfj Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Virtus Nfj is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Virtus Nfj and Dreyfus High

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

The idea behind Virtus Nfj Large Cap and Dreyfus High Yield 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.