Correlation Between Balanced Fund and Deutsche Equity
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Deutsche Equity 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 Balanced Fund and Deutsche Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Retail and Deutsche Equity 500, you can compare the effects of market volatilities on Balanced Fund and Deutsche Equity 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 Balanced Fund with a short position of Deutsche Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Deutsche Equity.
Diversification Opportunities for Balanced Fund and Deutsche Equity
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Balanced and DEUTSCHE is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Deutsche Equity 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Equity 500 and Balanced Fund 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 Balanced Fund Retail are associated (or correlated) with Deutsche Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Equity 500 has no effect on the direction of Balanced Fund i.e., Balanced Fund and Deutsche Equity go up and down completely randomly.
Pair Corralation between Balanced Fund and Deutsche Equity
Assuming the 90 days horizon Balanced Fund is expected to generate 1.89 times less return on investment than Deutsche Equity. But when comparing it to its historical volatility, Balanced Fund Retail is 1.36 times less risky than Deutsche Equity. It trades about 0.26 of its potential returns per unit of risk. Deutsche Equity 500 is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 17,896 in Deutsche Equity 500 on September 1, 2024 and sell it today you would earn a total of 1,048 from holding Deutsche Equity 500 or generate 5.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Balanced Fund Retail vs. Deutsche Equity 500
Performance |
| Timeline |
| Balanced Fund Retail |
| Deutsche Equity 500 |
Balanced Fund and Deutsche Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Deutsche Equity
The main advantage of trading using opposite Balanced Fund and Deutsche Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Deutsche Equity 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 Equity will offset losses from the drop in Deutsche Equity's long position.| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
| Deutsche Equity vs. Deutsche Global Small | Deutsche Equity vs. Deutsche Capital Growth | Deutsche Equity vs. Deutsche Sp 500 |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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