Correlation Between DWS Municipal and 1812 Brewing
Can any of the company-specific risk be diversified away by investing in both DWS Municipal and 1812 Brewing 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 DWS Municipal and 1812 Brewing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DWS Municipal Income and 1812 Brewing, you can compare the effects of market volatilities on DWS Municipal and 1812 Brewing 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 DWS Municipal with a short position of 1812 Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and 1812 Brewing.
Diversification Opportunities for DWS Municipal and 1812 Brewing
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between DWS and 1812 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and 1812 Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1812 Brewing and DWS Municipal 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 DWS Municipal Income are associated (or correlated) with 1812 Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1812 Brewing has no effect on the direction of DWS Municipal i.e., DWS Municipal and 1812 Brewing go up and down completely randomly.
Pair Corralation between DWS Municipal and 1812 Brewing
Considering the 90-day investment horizon DWS Municipal is expected to generate 1286.51 times less return on investment than 1812 Brewing. But when comparing it to its historical volatility, DWS Municipal Income is 363.37 times less risky than 1812 Brewing. It trades about 0.07 of its potential returns per unit of risk. 1812 Brewing is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 0.04 in 1812 Brewing on September 20, 2024 and sell it today you would lose (0.03) from holding 1812 Brewing or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
DWS Municipal Income vs. 1812 Brewing
Performance |
| Timeline |
| DWS Municipal Income |
| 1812 Brewing |
DWS Municipal and 1812 Brewing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DWS Municipal and 1812 Brewing
The main advantage of trading using opposite DWS Municipal and 1812 Brewing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DWS Municipal position performs unexpectedly, 1812 Brewing 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 1812 Brewing will offset losses from the drop in 1812 Brewing's long position.The idea behind DWS Municipal Income and 1812 Brewing 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.| 1812 Brewing vs. Nuveen Global High | 1812 Brewing vs. New America High | 1812 Brewing vs. Brookfield Business Corp | 1812 Brewing vs. DWS Municipal Income |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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