Correlation Between Dreyfus Sustainable and Gmo Global

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

By analyzing existing cross correlation between The Dreyfus Sustainable and Gmo Global Equity, you can compare the effects of market volatilities on Dreyfus Sustainable and Gmo Global 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 Sustainable with a short position of Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Sustainable and Gmo Global.

Diversification Opportunities for Dreyfus Sustainable and Gmo Global

0.98

Correlation Coefficient

Dreyfus Sustainable  Gmo Global

Almost no diversification

The 3 months correlation between Dreyfus and Gmo is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding The Dreyfus Sustainable and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Equity and Dreyfus Sustainable 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 The Dreyfus Sustainable are associated (or correlated) with Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Dreyfus Sustainable i.e., Dreyfus Sustainable and Gmo Global go up and down completely randomly.

Pair Corralation between Dreyfus Sustainable and Gmo Global

Assuming the 90 days horizon The Dreyfus Sustainable is expected to generate 1.19 times more return on investment than Gmo Global. However, Dreyfus Sustainable is 1.19 times more volatile than Gmo Global Equity. It trades about 0.25 of its potential returns per unit of risk. Gmo Global Equity is currently generating about 0.17 per unit of risk. If you would invest  1,800  in The Dreyfus Sustainable on May 4, 2025 and sell it today you would earn a total of  227.00  from holding The Dreyfus Sustainable or generate 12.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

The Dreyfus Sustainable  vs.  Gmo Global Equity

The Dreyfus Sustainable

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Dreyfus Sustainable are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Dreyfus Sustainable may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Gmo Global Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Global Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Gmo Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Dreyfus Sustainable and Gmo Global

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

The idea behind The Dreyfus Sustainable and Gmo Global Equity 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.