Correlation Between Deutsche and Dreyfus Opportunistic

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

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

Diversification Opportunities for Deutsche and Dreyfus Opportunistic

0.82

Correlation Coefficient

Deutsche  Dreyfus Opportunistic

Very poor diversification

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

Pair Corralation between Deutsche and Dreyfus Opportunistic

Assuming the 90 days horizon Deutsche Sp 500 is expected to generate 0.58 times more return on investment than Dreyfus Opportunistic. However, Deutsche Sp 500 is 1.72 times less risky than Dreyfus Opportunistic. It trades about 0.2 of its potential returns per unit of risk. Dreyfus Opportunistic Small is currently generating about 0.07 per unit of risk. If you would invest  4,796  in Deutsche Sp 500 on September 13, 2024 and sell it today you would earn a total of  403.00  from holding Deutsche Sp 500 or generate 8.4% return on investment over 90 days.

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

Deutsche Sp 500  vs.  Dreyfus Opportunistic Small

Deutsche Sp 500

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Sp 500 are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Deutsche may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dreyfus Opportunistic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Opportunistic Small are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Dreyfus Opportunistic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Deutsche and Dreyfus Opportunistic

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

The idea behind Deutsche Sp 500 and Dreyfus Opportunistic Small 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.