Correlation Between Deutsche Capital and Jacob Small
Can any of the company-specific risk be diversified away by investing in both Deutsche Capital and Jacob Small 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 Capital and Jacob Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Capital Growth and Jacob Small Cap, you can compare the effects of market volatilities on Deutsche Capital and Jacob Small 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 Capital with a short position of Jacob Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Capital and Jacob Small.
Diversification Opportunities for Deutsche Capital and Jacob Small
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Deutsche and Jacob is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Capital Growth and Jacob Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Small Cap and Deutsche Capital 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 Capital Growth are associated (or correlated) with Jacob Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Small Cap has no effect on the direction of Deutsche Capital i.e., Deutsche Capital and Jacob Small go up and down completely randomly.
Pair Corralation between Deutsche Capital and Jacob Small
Assuming the 90 days horizon Deutsche Capital is expected to generate 1.59 times less return on investment than Jacob Small. But when comparing it to its historical volatility, Deutsche Capital Growth is 2.04 times less risky than Jacob Small. It trades about 0.11 of its potential returns per unit of risk. Jacob Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,839 in Jacob Small Cap on September 1, 2024 and sell it today you would earn a total of 396.00 from holding Jacob Small Cap or generate 21.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Capital Growth vs. Jacob Small Cap
Performance |
| Timeline |
| Deutsche Capital Growth |
| Jacob Small Cap |
Deutsche Capital and Jacob Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Capital and Jacob Small
The main advantage of trading using opposite Deutsche Capital and Jacob Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Capital position performs unexpectedly, Jacob Small 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 Jacob Small will offset losses from the drop in Jacob Small's long position.| Deutsche Capital vs. Deutsche Gnma Fund | Deutsche Capital vs. Deutsche Short Term Municipal | Deutsche Capital vs. Deutsche Short Term Municipal | Deutsche Capital vs. Deutsche Science And |
| Jacob Small vs. Jacob Internet Fund | Jacob Small vs. Jacob Small Cap | Jacob Small vs. Jacob Micro Cap | Jacob Small vs. Jacob Micro Cap |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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