Correlation Between Dreyfus Municipal and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Dreyfus Municipal and Financial Industries 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 Municipal and Financial Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Municipal Bond and Financial Industries Fund, you can compare the effects of market volatilities on Dreyfus Municipal and Financial Industries 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 Municipal with a short position of Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Municipal and Financial Industries.
Diversification Opportunities for Dreyfus Municipal and Financial Industries
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dreyfus and Financial is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Municipal Bond and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries and Dreyfus Municipal 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 Municipal Bond are associated (or correlated) with Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Dreyfus Municipal i.e., Dreyfus Municipal and Financial Industries go up and down completely randomly.
Pair Corralation between Dreyfus Municipal and Financial Industries
Assuming the 90 days horizon Dreyfus Municipal Bond is expected to generate 0.3 times more return on investment than Financial Industries. However, Dreyfus Municipal Bond is 3.35 times less risky than Financial Industries. It trades about 0.37 of its potential returns per unit of risk. Financial Industries Fund is currently generating about -0.01 per unit of risk. If you would invest 1,098 in Dreyfus Municipal Bond on August 31, 2025 and sell it today you would earn a total of 80.00 from holding Dreyfus Municipal Bond or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus Municipal Bond vs. Financial Industries Fund
Performance |
| Timeline |
| Dreyfus Municipal Bond |
| Financial Industries |
Dreyfus Municipal and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Municipal and Financial Industries
The main advantage of trading using opposite Dreyfus Municipal and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Municipal position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Dreyfus Municipal vs. Vanguard Short Term Treasury | Dreyfus Municipal vs. Touchstone Ultra Short | Dreyfus Municipal vs. Old Westbury Short Term | Dreyfus Municipal vs. Angel Oak Ultrashort |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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