Correlation Between Dreyfus Sp and Dreyfus Appreciation

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

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

Diversification Opportunities for Dreyfus Sp and Dreyfus Appreciation

0.82

Correlation Coefficient

Dreyfus Sp  Dreyfus Appreciation

Very poor diversification

The 3 months correlation between Dreyfus and Dreyfus is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Sp 500 and Dreyfus Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Appreciation and Dreyfus Sp 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 Sp 500 are associated (or correlated) with Dreyfus Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Appreciation has no effect on the direction of Dreyfus Sp i.e., Dreyfus Sp and Dreyfus Appreciation go up and down completely randomly.

Pair Corralation between Dreyfus Sp and Dreyfus Appreciation

Assuming the 90 days horizon Dreyfus Sp 500 is expected to generate 1.12 times more return on investment than Dreyfus Appreciation. However, Dreyfus Sp is 1.12 times more volatile than Dreyfus Appreciation Fund. It trades about 0.37 of its potential returns per unit of risk. Dreyfus Appreciation Fund is currently generating about 0.28 per unit of risk. If you would invest  6,158  in Dreyfus Sp 500 on September 3, 2024 and sell it today you would earn a total of  350.00  from holding Dreyfus Sp 500 or generate 5.68% return on investment over 90 days.

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

Dreyfus Sp 500  vs.  Dreyfus Appreciation Fund

Dreyfus Sp 500

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Sp 500 are ranked lower than 15 (%) 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.

Dreyfus Appreciation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Appreciation Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dreyfus Appreciation 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 Sp and Dreyfus Appreciation

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

The idea behind Dreyfus Sp 500 and Dreyfus Appreciation 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.