Correlation Between Dreyfus Natural and First Trust
Can any of the company-specific risk be diversified away by investing in both Dreyfus Natural and First Trust 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 Natural and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Natural Resources and First Trust Preferred, you can compare the effects of market volatilities on Dreyfus Natural and First Trust 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 Natural with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Natural and First Trust.
Diversification Opportunities for Dreyfus Natural and First Trust
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dreyfus and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Natural Resources and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred and Dreyfus Natural 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 Natural Resources are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Preferred has no effect on the direction of Dreyfus Natural i.e., Dreyfus Natural and First Trust go up and down completely randomly.
Pair Corralation between Dreyfus Natural and First Trust
Assuming the 90 days horizon Dreyfus Natural Resources is expected to generate 7.72 times more return on investment than First Trust. However, Dreyfus Natural is 7.72 times more volatile than First Trust Preferred. It trades about 0.3 of its potential returns per unit of risk. First Trust Preferred is currently generating about 0.56 per unit of risk. If you would invest 3,657 in Dreyfus Natural Resources on April 14, 2025 and sell it today you would earn a total of 853.00 from holding Dreyfus Natural Resources or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Natural Resources vs. First Trust Preferred
Performance |
| Timeline |
| Dreyfus Natural Resources |
| First Trust Preferred |
Dreyfus Natural and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Natural and First Trust
The main advantage of trading using opposite Dreyfus Natural and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Natural position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Dreyfus Natural vs. Ab High Income | Dreyfus Natural vs. Aqr Risk Parity | Dreyfus Natural vs. Metropolitan West High | Dreyfus Natural vs. Ab High Income |
| First Trust vs. Mfs Diversified Income | First Trust vs. Global Diversified Income | First Trust vs. Elfun Diversified Fund | First Trust vs. Harbor Diversified International |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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