Correlation Between Absolute Convertible and Deutsche Emerging
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Deutsche Emerging 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 Absolute Convertible and Deutsche Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Deutsche Emerging Markets, you can compare the effects of market volatilities on Absolute Convertible and Deutsche Emerging 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 Absolute Convertible with a short position of Deutsche Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Deutsche Emerging.
Diversification Opportunities for Absolute Convertible and Deutsche Emerging
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Absolute and Deutsche is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Deutsche Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Emerging Markets and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Deutsche Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Emerging Markets has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Deutsche Emerging go up and down completely randomly.
Pair Corralation between Absolute Convertible and Deutsche Emerging
Assuming the 90 days horizon Absolute Convertible is expected to generate 4.68 times less return on investment than Deutsche Emerging. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 13.53 times less risky than Deutsche Emerging. It trades about 0.38 of its potential returns per unit of risk. Deutsche Emerging Markets is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,842 in Deutsche Emerging Markets on September 13, 2024 and sell it today you would earn a total of 37.00 from holding Deutsche Emerging Markets or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Deutsche Emerging Markets
Performance |
| Timeline |
| Absolute Convertible |
| Deutsche Emerging Markets |
Absolute Convertible and Deutsche Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Deutsche Emerging
The main advantage of trading using opposite Absolute Convertible and Deutsche Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Deutsche Emerging 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 Deutsche Emerging will offset losses from the drop in Deutsche Emerging's long position.| Absolute Convertible vs. Advent Claymore Convertible | Absolute Convertible vs. Fidelity Sai Convertible | Absolute Convertible vs. Virtus Convertible | Absolute Convertible vs. Putnam Convertible Incm Gwth |
| Deutsche Emerging vs. Deutsche Gnma Fund | Deutsche Emerging vs. Deutsche Short Term Municipal | Deutsche Emerging vs. Deutsche Short Term Municipal | Deutsche Emerging vs. Deutsche Science And |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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