Correlation Between Dreyfusstandish Global and Capital Income

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

By analyzing existing cross correlation between Dreyfusstandish Global Fixed and Capital Income Builder, you can compare the effects of market volatilities on Dreyfusstandish Global and Capital Income 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 Dreyfusstandish Global with a short position of Capital Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfusstandish Global and Capital Income.

Diversification Opportunities for Dreyfusstandish Global and Capital Income

0.29

Correlation Coefficient

Dreyfusstandish Global  Capital Income

Modest diversification

The 3 months correlation between Dreyfusstandish and Capital is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfusstandish Global Fixed and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder and Dreyfusstandish Global 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 Dreyfusstandish Global Fixed are associated (or correlated) with Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of Dreyfusstandish Global i.e., Dreyfusstandish Global and Capital Income go up and down completely randomly.

Pair Corralation between Dreyfusstandish Global and Capital Income

Assuming the 90 days horizon Dreyfusstandish Global Fixed is expected to generate 0.28 times more return on investment than Capital Income. However, Dreyfusstandish Global Fixed is 3.52 times less risky than Capital Income. It trades about -0.09 of its potential returns per unit of risk. Capital Income Builder is currently generating about -0.16 per unit of risk. If you would invest  1,993  in Dreyfusstandish Global Fixed on September 21, 2024 and sell it today you would lose (23.00) from holding Dreyfusstandish Global Fixed or give up 1.15% of portfolio value over 90 days.

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

Dreyfusstandish Global Fixed  vs.  Capital Income Builder

Dreyfusstandish Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Capital Income Builder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Income Builder has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Dreyfusstandish Global and Capital Income

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

The idea behind Dreyfusstandish Global Fixed and Capital Income Builder 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..