Correlation Between Dreyfus Active and Transamerica Cleartrack

Can any of the company-specific risk be diversified away by investing in both Dreyfus Active and Transamerica Cleartrack 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 Transamerica Cleartrack 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 Transamerica Cleartrack Retirement, you can compare the effects of market volatilities on Dreyfus Active and Transamerica Cleartrack 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 Transamerica Cleartrack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Active and Transamerica Cleartrack.

Diversification Opportunities for Dreyfus Active and Transamerica Cleartrack

0.68

Correlation Coefficient

Dreyfus Active  Transamerica Cleartrack

Poor diversification

The 3 months correlation between Dreyfus and Transamerica is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Active Midcap and Transamerica Cleartrack Retire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Cleartrack 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 Transamerica Cleartrack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Cleartrack has no effect on the direction of Dreyfus Active i.e., Dreyfus Active and Transamerica Cleartrack go up and down completely randomly.

Pair Corralation between Dreyfus Active and Transamerica Cleartrack

Assuming the 90 days horizon Dreyfus Active Midcap is expected to generate 2.64 times more return on investment than Transamerica Cleartrack. However, Dreyfus Active is 2.64 times more volatile than Transamerica Cleartrack Retirement. It trades about 0.2 of its potential returns per unit of risk. Transamerica Cleartrack Retirement is currently generating about 0.1 per unit of risk. If you would invest  6,051  in Dreyfus Active Midcap on September 12, 2024 and sell it today you would earn a total of  655.00  from holding Dreyfus Active Midcap or generate 10.82% return on investment over 90 days.

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

Dreyfus Active Midcap  vs.  Transamerica Cleartrack Retire

Dreyfus Active Midcap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Active Midcap are ranked lower than 16 (%) 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.

Transamerica Cleartrack

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Cleartrack Retirement are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transamerica Cleartrack is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dreyfus Active and Transamerica Cleartrack

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

The idea behind Dreyfus Active Midcap and Transamerica Cleartrack Retirement 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 Anywhere module to track or share privately all of your investments from the convenience of any device.