Correlation Between VHAI and Dreyfus Technology

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

By analyzing existing cross correlation between VHAI and Dreyfus Technology Growth, you can compare the effects of market volatilities on VHAI and Dreyfus Technology 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 VHAI with a short position of Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of VHAI and Dreyfus Technology.

Diversification Opportunities for VHAI and Dreyfus Technology

-0.77

Correlation Coefficient

VHAI  Dreyfus Technology

Pay attention - limited upside

The 3 months correlation between VHAI and Dreyfus is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Dreyfus Technology Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Technology Growth and VHAI 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 VHAI are associated (or correlated) with Dreyfus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Technology Growth has no effect on the direction of VHAI i.e., VHAI and Dreyfus Technology go up and down completely randomly.

Pair Corralation between VHAI and Dreyfus Technology

Given the investment horizon of 90 days VHAI is expected to generate 10.43 times more return on investment than Dreyfus Technology. However, VHAI is 10.43 times more volatile than Dreyfus Technology Growth. It trades about 0.06 of its potential returns per unit of risk. Dreyfus Technology Growth is currently generating about 0.02 per unit of risk. If you would invest  0.56  in VHAI on September 12, 2024 and sell it today you would earn a total of  0.01  from holding VHAI or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	66.67%
Values	Daily Returns

VHAI  vs.  Dreyfus Technology Growth

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Dreyfus Technology Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Technology Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dreyfus Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VHAI and Dreyfus Technology

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

The idea behind VHAI and Dreyfus Technology Growth 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.