Correlation Between Deutsche Health and American Beacon
Can any of the company-specific risk be diversified away by investing in both Deutsche Health and American Beacon 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 Health and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Health And and American Beacon Small, you can compare the effects of market volatilities on Deutsche Health and American Beacon 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 Health with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Health and American Beacon.
Diversification Opportunities for Deutsche Health and American Beacon
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Deutsche and American is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Health And and American Beacon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Small and Deutsche Health 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 Health And are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Small has no effect on the direction of Deutsche Health i.e., Deutsche Health and American Beacon go up and down completely randomly.
Pair Corralation between Deutsche Health and American Beacon
Assuming the 90 days horizon Deutsche Health And is expected to generate 8.46 times more return on investment than American Beacon. However, Deutsche Health is 8.46 times more volatile than American Beacon Small. It trades about 0.04 of its potential returns per unit of risk. American Beacon Small is currently generating about -0.09 per unit of risk. If you would invest 4,360 in Deutsche Health And on September 4, 2024 and sell it today you would earn a total of 29.00 from holding Deutsche Health And or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Health And vs. American Beacon Small
Performance |
| Timeline |
| Deutsche Health And |
| American Beacon Small |
Deutsche Health and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Health and American Beacon
The main advantage of trading using opposite Deutsche Health and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Health position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Deutsche Health vs. Deutsche Gnma Fund | Deutsche Health vs. Deutsche Short Term Municipal | Deutsche Health vs. Deutsche Short Term Municipal | Deutsche Health vs. Deutsche Science And |
| American Beacon vs. Columbia Small Cap | American Beacon vs. Amg River Road | American Beacon vs. Fpa Queens Road | American Beacon vs. Pace Smallmedium Value |
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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