Correlation Between Buffalo Growth and Dreyfus Technology

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

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

Diversification Opportunities for Buffalo Growth and Dreyfus Technology

0.87

Correlation Coefficient

Buffalo Growth  Dreyfus Technology

Very poor diversification

The 3 months correlation between Buffalo and Dreyfus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo Growth 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 Buffalo Growth 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 Buffalo Growth 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 Buffalo Growth i.e., Buffalo Growth and Dreyfus Technology go up and down completely randomly.

Pair Corralation between Buffalo Growth and Dreyfus Technology

Assuming the 90 days horizon Buffalo Growth is expected to generate 4.06 times less return on investment than Dreyfus Technology. In addition to that, Buffalo Growth is 1.21 times more volatile than Dreyfus Technology Growth. It trades about 0.03 of its total potential returns per unit of risk. Dreyfus Technology Growth is currently generating about 0.15 per unit of volatility. If you would invest  7,201  in Dreyfus Technology Growth on September 12, 2024 and sell it today you would earn a total of  742.00  from holding Dreyfus Technology Growth or generate 10.3% return on investment over 90 days.

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

Buffalo Growth  vs.  Dreyfus Technology Growth

Buffalo Growth

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Buffalo Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Buffalo Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus Technology Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Technology Growth are ranked lower than 11 (%) 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 Buffalo Growth and Dreyfus Technology

The main advantage of trading using opposite Buffalo Growth and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo Growth 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 Buffalo Growth 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 Commodity Directory module to find actively traded commodities issued by global exchanges.