Correlation Between DWS Municipal and Ecofin Sustainable
Can any of the company-specific risk be diversified away by investing in both DWS Municipal and Ecofin Sustainable 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 Ecofin Sustainable 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 Ecofin Sustainable And, you can compare the effects of market volatilities on DWS Municipal and Ecofin Sustainable 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 Ecofin Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and Ecofin Sustainable.
Diversification Opportunities for DWS Municipal and Ecofin Sustainable
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DWS and Ecofin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and Ecofin Sustainable And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Sustainable And 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 Ecofin Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Sustainable And has no effect on the direction of DWS Municipal i.e., DWS Municipal and Ecofin Sustainable go up and down completely randomly.
Pair Corralation between DWS Municipal and Ecofin Sustainable
Considering the 90-day investment horizon DWS Municipal Income is expected to generate 0.91 times more return on investment than Ecofin Sustainable. However, DWS Municipal Income is 1.1 times less risky than Ecofin Sustainable. It trades about 0.21 of its potential returns per unit of risk. Ecofin Sustainable And is currently generating about -0.2 per unit of risk. If you would invest 965.00 in DWS Municipal Income on August 27, 2024 and sell it today you would earn a total of 27.00 from holding DWS Municipal Income or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DWS Municipal Income vs. Ecofin Sustainable And
Performance |
| Timeline |
| DWS Municipal Income |
| Ecofin Sustainable And |
DWS Municipal and Ecofin Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DWS Municipal and Ecofin Sustainable
The main advantage of trading using opposite DWS Municipal and Ecofin Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DWS Municipal position performs unexpectedly, Ecofin Sustainable 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 Ecofin Sustainable will offset losses from the drop in Ecofin Sustainable's long position.| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
| Ecofin Sustainable vs. Invesco Advantage MIT | Ecofin Sustainable vs. Invesco Quality Municipal | Ecofin Sustainable vs. Invesco California Value | Ecofin Sustainable 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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