Correlation Between Blackrock Health and Dreyfus Active

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

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

Diversification Opportunities for Blackrock Health and Dreyfus Active

-0.66

Correlation Coefficient

Blackrock Health  Dreyfus Active

Excellent diversification

The 3 months correlation between Blackrock and Dreyfus is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Health Sciences 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 Blackrock Health 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 Blackrock Health Sciences 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 Blackrock Health i.e., Blackrock Health and Dreyfus Active go up and down completely randomly.

Pair Corralation between Blackrock Health and Dreyfus Active

Assuming the 90 days horizon Blackrock Health is expected to generate 5.98 times less return on investment than Dreyfus Active. But when comparing it to its historical volatility, Blackrock Health Sciences is 1.27 times less risky than Dreyfus Active. It trades about 0.02 of its potential returns per unit of risk. Dreyfus Active Midcap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,912  in Dreyfus Active Midcap on September 5, 2024 and sell it today you would earn a total of  1,921  from holding Dreyfus Active Midcap or generate 39.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Blackrock Health Sciences  vs.  Dreyfus Active Midcap

Blackrock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock Health 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

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Active Midcap are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Dreyfus Active showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock Health and Dreyfus Active

The main advantage of trading using opposite Blackrock Health and Dreyfus Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Health 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 Blackrock Health Sciences 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .