Correlation Between Kbi Global and Dreyfus Natural

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Can any of the company-specific risk be diversified away by investing in both Kbi Global and Dreyfus Natural 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 Kbi Global and Dreyfus Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kbi Global Investors and Dreyfus Natural Resources, you can compare the effects of market volatilities on Kbi Global and Dreyfus Natural 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 Kbi Global with a short position of Dreyfus Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Global and Dreyfus Natural.

Diversification Opportunities for Kbi Global and Dreyfus Natural

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Kbi and Dreyfus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding KBI GLOBAL INVESTORS and DREYFUS NATURAL RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Natural Resources and Kbi Global 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 Kbi Global Investors are associated (or correlated) with Dreyfus Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Natural Resources has no effect on the direction of Kbi Global i.e., Kbi Global and Dreyfus Natural go up and down completely randomly.

Pair Corralation between Kbi Global and Dreyfus Natural

Assuming the 90 days horizon Kbi Global is expected to generate 2.49 times less return on investment than Dreyfus Natural. But when comparing it to its historical volatility, Kbi Global Investors is 1.27 times less risky than Dreyfus Natural. It trades about 0.25 of its potential returns per unit of risk. Dreyfus Natural Resources is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest  4,350  in Dreyfus Natural Resources on December 29, 2023 and sell it today you would earn a total of  425.00  from holding Dreyfus Natural Resources or generate 9.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

KBI GLOBAL INVESTORS  vs.  DREYFUS NATURAL RESOURCES

 Performance 
       Timeline  
Kbi Global Investors 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Kbi Global Investors are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Kbi Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Dreyfus Natural Resources 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Natural Resources are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Dreyfus Natural may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Kbi Global and Dreyfus Natural Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kbi Global and Dreyfus Natural

The main advantage of trading using opposite Kbi Global and Dreyfus Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Global position performs unexpectedly, Dreyfus Natural 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 Natural will offset losses from the drop in Dreyfus Natural's long position.
The idea behind Kbi Global Investors and Dreyfus Natural Resources 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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