Correlation Between Dreyfus Balanced and Aggressive Growth

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

By analyzing existing cross correlation between Dreyfus Balanced Opportunity and Aggressive Growth Portfolio, you can compare the effects of market volatilities on Dreyfus Balanced and Aggressive Growth 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 Balanced with a short position of Aggressive Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Balanced and Aggressive Growth.

Diversification Opportunities for Dreyfus Balanced and Aggressive Growth

0.58

Correlation Coefficient

Dreyfus Balanced  Aggressive Growth

Very weak diversification

The 3 months correlation between Dreyfus and Aggressive is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Balanced Opportunity and Aggressive Growth Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Growth and Dreyfus Balanced 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 Balanced Opportunity are associated (or correlated) with Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Dreyfus Balanced i.e., Dreyfus Balanced and Aggressive Growth go up and down completely randomly.

Pair Corralation between Dreyfus Balanced and Aggressive Growth

Assuming the 90 days horizon Dreyfus Balanced Opportunity is expected to under-perform the Aggressive Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dreyfus Balanced Opportunity is 1.39 times less risky than Aggressive Growth. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Aggressive Growth Portfolio is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,074  in Aggressive Growth Portfolio on September 26, 2024 and sell it today you would earn a total of  479.00  from holding Aggressive Growth Portfolio or generate 4.75% return on investment over 90 days.

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

Dreyfus Balanced Opportunity  vs.  Aggressive Growth Portfolio

Dreyfus Balanced Opp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aggressive Growth

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Growth Portfolio are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aggressive Growth 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 Balanced and Aggressive Growth

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

The idea behind Dreyfus Balanced Opportunity and Aggressive Growth Portfolio 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.