Correlation Between Sprott Physical and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and DWS Municipal 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 Sprott Physical and DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Physical Gold and DWS Municipal Income, you can compare the effects of market volatilities on Sprott Physical and DWS Municipal 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 Sprott Physical with a short position of DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and DWS Municipal.
Diversification Opportunities for Sprott Physical and DWS Municipal
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sprott and DWS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income and Sprott Physical 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 Sprott Physical Gold are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Sprott Physical i.e., Sprott Physical and DWS Municipal go up and down completely randomly.
Pair Corralation between Sprott Physical and DWS Municipal
Given the investment horizon of 90 days Sprott Physical Gold is expected to under-perform the DWS Municipal. In addition to that, Sprott Physical is 2.34 times more volatile than DWS Municipal Income. It trades about -0.19 of its total potential returns per unit of risk. DWS Municipal Income is currently generating about 0.3 per unit of volatility. If you would invest 961.00 in DWS Municipal Income on August 30, 2024 and sell it today you would earn a total of 39.00 from holding DWS Municipal Income or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Physical Gold vs. DWS Municipal Income
Performance |
| Timeline |
| Sprott Physical Gold |
| DWS Municipal Income |
Sprott Physical and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and DWS Municipal
The main advantage of trading using opposite Sprott Physical and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.| Sprott Physical vs. Sprott Physical Gold | Sprott Physical vs. Sprott Physical Platinum | Sprott Physical vs. Sprott Inc | Sprott Physical vs. Brookfield Real Assets |
| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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