Correlation Between Dreyfus Technology and Vanguard Information

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

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

Diversification Opportunities for Dreyfus Technology and Vanguard Information

0.9

Correlation Coefficient

Dreyfus Technology  Vanguard Information

Almost no diversification

The 1 month correlation between Dreyfus and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Technology Growth and Vanguard Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Information and Dreyfus Technology 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 Technology Growth are associated (or correlated) with Vanguard Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Information has no effect on the direction of Dreyfus Technology i.e., Dreyfus Technology and Vanguard Information go up and down completely randomly.

Pair Corralation between Dreyfus Technology and Vanguard Information

Assuming the 90 days horizon Dreyfus Technology Growth is expected to under-perform the Vanguard Information. In addition to that, Dreyfus Technology is 1.04 times more volatile than Vanguard Information Technology. It trades about -0.07 of its total potential returns per unit of risk. Vanguard Information Technology is currently generating about 0.18 per unit of volatility. If you would invest  26,480  in Vanguard Information Technology on March 5, 2024 and sell it today you would earn a total of  854.00  from holding Vanguard Information Technology or generate 3.23% return on investment over 90 days.

Time Period	1 Month [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Dreyfus Technology Growth  vs.  Vanguard Information Technolog

Dreyfus Technology Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vanguard Information

Risk-Adjusted Performance

13 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Information may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Dreyfus Technology and Vanguard Information

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

The idea behind Dreyfus Technology Growth and Vanguard Information Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.