Correlation Between International Stock and Dreyfus Sp

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

By analyzing existing cross correlation between International Stock Fund and Dreyfus Sp 500, you can compare the effects of market volatilities on International Stock and Dreyfus Sp 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 International Stock with a short position of Dreyfus Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Stock and Dreyfus Sp.

Diversification Opportunities for International Stock and Dreyfus Sp

-0.61

Correlation Coefficient

International Stock  Dreyfus Sp

Excellent diversification

The 3 months correlation between International and Dreyfus is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding International Stock Fund and Dreyfus Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Sp 500 and International Stock 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 International Stock Fund are associated (or correlated) with Dreyfus Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Sp 500 has no effect on the direction of International Stock i.e., International Stock and Dreyfus Sp go up and down completely randomly.

Pair Corralation between International Stock and Dreyfus Sp

Assuming the 90 days horizon International Stock is expected to generate 1.82 times less return on investment than Dreyfus Sp. But when comparing it to its historical volatility, International Stock Fund is 1.13 times less risky than Dreyfus Sp. It trades about 0.04 of its potential returns per unit of risk. Dreyfus Sp 500 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,955  in Dreyfus Sp 500 on September 4, 2024 and sell it today you would earn a total of  1,553  from holding Dreyfus Sp 500 or generate 31.34% return on investment over 90 days.

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

International Stock Fund  vs.  Dreyfus Sp 500

International Stock

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dreyfus Sp 500

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Sp 500 are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dreyfus Sp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with International Stock and Dreyfus Sp

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

The idea behind International Stock Fund and Dreyfus Sp 500 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.