Correlation Between Short Duration and Dreyfus Active

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

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

Diversification Opportunities for Short Duration and Dreyfus Active

-0.03

Correlation Coefficient

Short Duration  Dreyfus Active

Good diversification

The 3 months correlation between Short and Dreyfus is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and Dreyfus Active Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Active Midcap and Short Duration 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 Short Duration Inflation are associated (or correlated) with Dreyfus Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Active Midcap has no effect on the direction of Short Duration i.e., Short Duration and Dreyfus Active go up and down completely randomly.

Pair Corralation between Short Duration and Dreyfus Active

Assuming the 90 days horizon Short Duration is expected to generate 92.06 times less return on investment than Dreyfus Active. But when comparing it to its historical volatility, Short Duration Inflation is 5.7 times less risky than Dreyfus Active. It trades about 0.01 of its potential returns per unit of risk. Dreyfus Active Midcap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,156  in Dreyfus Active Midcap on September 13, 2024 and sell it today you would earn a total of  585.00  from holding Dreyfus Active Midcap or generate 9.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Short Duration Inflation  vs.  Dreyfus Active Midcap

Short Duration Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dreyfus Active Midcap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Active Midcap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dreyfus Active may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Short Duration and Dreyfus Active

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

The idea behind Short Duration Inflation and Dreyfus Active Midcap 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.