Correlation Between Deutsche Gnma and Deutsche European
Can any of the company-specific risk be diversified away by investing in both Deutsche Gnma and Deutsche European 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 Deutsche Gnma and Deutsche European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Gnma Fund and Deutsche European Equity, you can compare the effects of market volatilities on Deutsche Gnma and Deutsche European 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 Deutsche Gnma with a short position of Deutsche European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Gnma and Deutsche European.
Diversification Opportunities for Deutsche Gnma and Deutsche European
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Deutsche is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Gnma Fund and Deutsche European Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche European Equity and Deutsche Gnma 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 Deutsche Gnma Fund are associated (or correlated) with Deutsche European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche European Equity has no effect on the direction of Deutsche Gnma i.e., Deutsche Gnma and Deutsche European go up and down completely randomly.
Pair Corralation between Deutsche Gnma and Deutsche European
Assuming the 90 days horizon Deutsche Gnma Fund is expected to generate 0.47 times more return on investment than Deutsche European. However, Deutsche Gnma Fund is 2.11 times less risky than Deutsche European. It trades about -0.02 of its potential returns per unit of risk. Deutsche European Equity is currently generating about -0.03 per unit of risk. If you would invest 1,158 in Deutsche Gnma Fund on October 24, 2024 and sell it today you would lose (6.00) from holding Deutsche Gnma Fund or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Gnma Fund vs. Deutsche European Equity
Performance |
| Timeline |
| Deutsche Gnma |
| Deutsche European Equity |
Deutsche Gnma and Deutsche European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Gnma and Deutsche European
The main advantage of trading using opposite Deutsche Gnma and Deutsche European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Gnma position performs unexpectedly, Deutsche European 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 European will offset losses from the drop in Deutsche European's long position.| Deutsche Gnma vs. Aqr Sustainable Long Short | Deutsche Gnma vs. Siit Ultra Short | Deutsche Gnma vs. Rbc Short Duration | Deutsche Gnma vs. Blackrock Global Longshort |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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