Correlation Between Deutsche California and Deutsche Gnma
Can any of the company-specific risk be diversified away by investing in both Deutsche California and Deutsche Gnma 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 California and Deutsche Gnma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche California Tax Free and Deutsche Gnma Fund, you can compare the effects of market volatilities on Deutsche California and Deutsche Gnma 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 California with a short position of Deutsche Gnma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche California and Deutsche Gnma.
Diversification Opportunities for Deutsche California and Deutsche Gnma
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Deutsche is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche California Tax Free and Deutsche Gnma Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Gnma and Deutsche California 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 California Tax Free are associated (or correlated) with Deutsche Gnma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Gnma has no effect on the direction of Deutsche California i.e., Deutsche California and Deutsche Gnma go up and down completely randomly.
Pair Corralation between Deutsche California and Deutsche Gnma
Assuming the 90 days horizon Deutsche California Tax Free is expected to generate 0.84 times more return on investment than Deutsche Gnma. However, Deutsche California Tax Free is 1.19 times less risky than Deutsche Gnma. It trades about 0.15 of its potential returns per unit of risk. Deutsche Gnma Fund is currently generating about 0.12 per unit of risk. If you would invest 665.00 in Deutsche California Tax Free on September 3, 2024 and sell it today you would earn a total of 7.00 from holding Deutsche California Tax Free or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche California Tax Free vs. Deutsche Gnma Fund
Performance |
| Timeline |
| Deutsche California Tax |
| Deutsche Gnma |
Deutsche California and Deutsche Gnma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche California and Deutsche Gnma
The main advantage of trading using opposite Deutsche California and Deutsche Gnma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche California position performs unexpectedly, Deutsche Gnma 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 Gnma will offset losses from the drop in Deutsche Gnma's long position.| Deutsche California vs. The National Tax Free | Deutsche California vs. Dreyfusstandish Global Fixed | Deutsche California vs. Artisan High Income | Deutsche California vs. The Fixed Income |
| Deutsche Gnma vs. Rationalpier 88 Convertible | Deutsche Gnma vs. Ab Bond Inflation | Deutsche Gnma vs. California Bond Fund | Deutsche Gnma vs. Maryland Tax Free Bond |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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