Correlation Between Bny Mellon and Dreyfus Municipal

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

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

Diversification Opportunities for Bny Mellon and Dreyfus Municipal

0.76

Correlation Coefficient

Bny Mellon  Dreyfus Municipal

Poor diversification

The 3 months correlation between Bny and Dreyfus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Short and Dreyfus Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipal Bond and Bny Mellon 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 Bny Mellon Short are associated (or correlated) with Dreyfus Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipal Bond has no effect on the direction of Bny Mellon i.e., Bny Mellon and Dreyfus Municipal go up and down completely randomly.

Pair Corralation between Bny Mellon and Dreyfus Municipal

Assuming the 90 days horizon Bny Mellon is expected to generate 168.0 times less return on investment than Dreyfus Municipal. But when comparing it to its historical volatility, Bny Mellon Short is 2.12 times less risky than Dreyfus Municipal. It trades about 0.0 of its potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,224  in Dreyfus Municipal Bond on September 4, 2024 and sell it today you would earn a total of  13.00  from holding Dreyfus Municipal Bond or generate 1.06% return on investment over 90 days.

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

Bny Mellon Short  vs.  Dreyfus Municipal Bond

Bny Mellon Short

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dreyfus Municipal Bond

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Municipal Bond are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Dreyfus Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bny Mellon and Dreyfus Municipal

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

The idea behind Bny Mellon Short and Dreyfus Municipal Bond 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.