Correlation Between Dreyfus Municipalome and Dreyfus Research

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

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

Diversification Opportunities for Dreyfus Municipalome and Dreyfus Research

0.35

Correlation Coefficient

Dreyfus Municipalome  Dreyfus Research

Weak diversification

The 3 months correlation between Dreyfus and Dreyfus is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Municipalome and Dreyfus Research Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Research Growth and Dreyfus Municipalome 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 Dreyfus Municipalome are associated (or correlated) with Dreyfus Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Research Growth has no effect on the direction of Dreyfus Municipalome i.e., Dreyfus Municipalome and Dreyfus Research go up and down completely randomly.

Pair Corralation between Dreyfus Municipalome and Dreyfus Research

Assuming the 90 days horizon Dreyfus Municipalome is expected to generate 0.27 times more return on investment than Dreyfus Research. However, Dreyfus Municipalome is 3.68 times less risky than Dreyfus Research. It trades about -0.06 of its potential returns per unit of risk. Dreyfus Research Growth is currently generating about -0.12 per unit of risk. If you would invest  757.00  in Dreyfus Municipalome on December 22, 2024 and sell it today you would lose (13.00) from holding Dreyfus Municipalome or give up 1.72% of portfolio value over 90 days.

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

Dreyfus Municipalome  vs.  Dreyfus Research Growth

Dreyfus Municipalome

Risk-Adjusted Performance

Very Weak

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

Dreyfus Research Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dreyfus Research Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Dreyfus Municipalome and Dreyfus Research

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

The idea behind Dreyfus Municipalome and Dreyfus Research 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 Transaction History module to view history of all your transactions and understand their impact on performance.