Correlation Between Dow Jones and Deutsche Multi-asset
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Deutsche Multi-asset 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 Dow Jones and Deutsche Multi-asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Deutsche Multi Asset Moderate, you can compare the effects of market volatilities on Dow Jones and Deutsche Multi-asset 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 Dow Jones with a short position of Deutsche Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Deutsche Multi-asset.
Diversification Opportunities for Dow Jones and Deutsche Multi-asset
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Deutsche is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Deutsche Multi Asset Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Multi Asset and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Deutsche Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Multi Asset has no effect on the direction of Dow Jones i.e., Dow Jones and Deutsche Multi-asset go up and down completely randomly.
Pair Corralation between Dow Jones and Deutsche Multi-asset
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.92 times more return on investment than Deutsche Multi-asset. However, Dow Jones is 1.92 times more volatile than Deutsche Multi Asset Moderate. It trades about 0.29 of its potential returns per unit of risk. Deutsche Multi Asset Moderate is currently generating about 0.14 per unit of risk. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Deutsche Multi Asset Moderate
Performance |
| Timeline |
Dow Jones and Deutsche Multi-asset Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Deutsche Multi Asset Moderate
Pair trading matchups for Deutsche Multi-asset
Pair Trading with Dow Jones and Deutsche Multi-asset
The main advantage of trading using opposite Dow Jones and Deutsche Multi-asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Deutsche Multi-asset 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 Multi-asset will offset losses from the drop in Deutsche Multi-asset's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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