Correlation Between Dreyfus Active and Dreyfus Gnma

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Can any of the company-specific risk be diversified away by investing in both Dreyfus Active and Dreyfus Gnma 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 Dreyfus Active and Dreyfus Gnma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Active Midcap and Dreyfus Gnma Fund, you can compare the effects of market volatilities on Dreyfus Active and Dreyfus Gnma 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 Dreyfus Active with a short position of Dreyfus Gnma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Active and Dreyfus Gnma.

Diversification Opportunities for Dreyfus Active and Dreyfus Gnma

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Dreyfus and Dreyfus is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Active Midcap and Dreyfus Gnma Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Gnma and Dreyfus Active 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 Dreyfus Active Midcap are associated (or correlated) with Dreyfus Gnma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Gnma has no effect on the direction of Dreyfus Active i.e., Dreyfus Active and Dreyfus Gnma go up and down completely randomly.

Pair Corralation between Dreyfus Active and Dreyfus Gnma

Assuming the 90 days horizon Dreyfus Active Midcap is expected to generate 2.8 times more return on investment than Dreyfus Gnma. However, Dreyfus Active is 2.8 times more volatile than Dreyfus Gnma Fund. It trades about 0.2 of its potential returns per unit of risk. Dreyfus Gnma Fund is currently generating about -0.11 per unit of risk. If you would invest  5,189  in Dreyfus Active Midcap on September 12, 2024 and sell it today you would earn a total of  551.00  from holding Dreyfus Active Midcap or generate 10.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Dreyfus Active Midcap  vs.  Dreyfus Gnma Fund

 Performance 
       Timeline  
Dreyfus Active Midcap 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Active Midcap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Dreyfus Active may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Dreyfus Gnma 

Risk-Adjusted Performance

0 of 100

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

Dreyfus Active and Dreyfus Gnma Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dreyfus Active and Dreyfus Gnma

The main advantage of trading using opposite Dreyfus Active and Dreyfus Gnma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Active position performs unexpectedly, Dreyfus Gnma 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 Gnma will offset losses from the drop in Dreyfus Gnma's long position.
The idea behind Dreyfus Active Midcap and Dreyfus Gnma Fund 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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