Correlation Between Dreyfus Equity and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Dreyfus Equity and Washington Mutual 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 Equity and Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Equity Income and Washington Mutual Investors, you can compare the effects of market volatilities on Dreyfus Equity and Washington Mutual 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 Equity with a short position of Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Equity and Washington Mutual.
Diversification Opportunities for Dreyfus Equity and Washington Mutual
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dreyfus and Washington is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Equity Income and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual and Dreyfus Equity 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 Equity Income are associated (or correlated) with Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Dreyfus Equity i.e., Dreyfus Equity and Washington Mutual go up and down completely randomly.
Pair Corralation between Dreyfus Equity and Washington Mutual
Assuming the 90 days horizon Dreyfus Equity Income is expected to generate 1.25 times more return on investment than Washington Mutual. However, Dreyfus Equity is 1.25 times more volatile than Washington Mutual Investors. It trades about -0.23 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about -0.31 per unit of risk. If you would invest 2,818 in Dreyfus Equity Income on January 24, 2024 and sell it today you would lose (102.00) from holding Dreyfus Equity Income or give up 3.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dreyfus Equity Income vs. Washington Mutual Investors
Performance |
Timeline |
Dreyfus Equity Me |
Washington Mutual |
Dreyfus Equity and Washington Mutual Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dreyfus Equity and Washington Mutual
The main advantage of trading using opposite Dreyfus Equity and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Equity position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual's long position.Dreyfus Equity vs. Dreyfusstandish Global Fixed | Dreyfus Equity vs. Dreyfusstandish Global Fixed | Dreyfus Equity vs. Dreyfus High Yield | Dreyfus Equity vs. Dreyfus High Yield |
Washington Mutual vs. Growth Fund Of | Washington Mutual vs. Europacific Growth Fund | Washington Mutual vs. Smallcap World Fund | Washington Mutual vs. New World Fund |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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