Correlation Between Nasdaq 100 and Dreyfus Active

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Dreyfus Active 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 Nasdaq 100 and Dreyfus Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 Index Fund and Dreyfus Active Midcap, you can compare the effects of market volatilities on Nasdaq 100 and Dreyfus Active 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 Nasdaq 100 with a short position of Dreyfus Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Dreyfus Active.

Diversification Opportunities for Nasdaq 100 and Dreyfus Active

0.93

Correlation Coefficient

Nasdaq 100  Dreyfus Active

Almost no diversification

The 3 months correlation between Nasdaq and Dreyfus is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Dreyfus Active Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Active Midcap and Nasdaq 100 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 Nasdaq 100 Index Fund are associated (or correlated) with Dreyfus Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Active Midcap has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Dreyfus Active go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Dreyfus Active

Assuming the 90 days horizon Nasdaq 100 is expected to generate 1.16 times less return on investment than Dreyfus Active. In addition to that, Nasdaq 100 is 1.27 times more volatile than Dreyfus Active Midcap. It trades about 0.16 of its total potential returns per unit of risk. Dreyfus Active Midcap is currently generating about 0.24 per unit of volatility. If you would invest  5,195  in Dreyfus Active Midcap on September 1, 2024 and sell it today you would earn a total of  664.00  from holding Dreyfus Active Midcap or generate 12.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Nasdaq 100 Index Fund  vs.  Dreyfus Active Midcap

Nasdaq 100 Index

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Index Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nasdaq 100 may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Dreyfus Active Midcap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Active Midcap are ranked lower than 18 (%) 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 December 2024.

Pair Trading with Nasdaq 100 and Dreyfus Active

The main advantage of trading using opposite Nasdaq 100 and Dreyfus Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Dreyfus Active 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 Active will offset losses from the drop in Dreyfus Active's long position.

The idea behind Nasdaq 100 Index Fund and Dreyfus Active Midcap 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.