Correlation Between Deutsche Enhanced and New World
Can any of the company-specific risk be diversified away by investing in both Deutsche Enhanced and New World 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 Enhanced and New World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Enhanced Modity and New World Fund, you can compare the effects of market volatilities on Deutsche Enhanced and New World 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 Enhanced with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Enhanced and New World.
Diversification Opportunities for Deutsche Enhanced and New World
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Deutsche and New is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Enhanced Modity and New World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Fund and Deutsche Enhanced 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 Enhanced Modity are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Fund has no effect on the direction of Deutsche Enhanced i.e., Deutsche Enhanced and New World go up and down completely randomly.
Pair Corralation between Deutsche Enhanced and New World
Assuming the 90 days horizon Deutsche Enhanced Modity is expected to under-perform the New World. But the mutual fund apears to be less risky and, when comparing its historical volatility, Deutsche Enhanced Modity is 1.16 times less risky than New World. The mutual fund trades about -0.01 of its potential returns per unit of risk. The New World Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,142 in New World Fund on August 29, 2024 and sell it today you would earn a total of 945.00 from holding New World Fund or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Enhanced Modity vs. New World Fund
Performance |
| Timeline |
| Deutsche Enhanced Modity |
| New World Fund |
Deutsche Enhanced and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Enhanced and New World
The main advantage of trading using opposite Deutsche Enhanced and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Enhanced position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.| Deutsche Enhanced vs. New World Fund | Deutsche Enhanced vs. Cohen Steers Real | Deutsche Enhanced vs. Europacific Growth Fund | Deutsche Enhanced vs. Deutsche Global Real |
| New World vs. Huber Capital Diversified | New World vs. Vanguard Strategic Small Cap | New World vs. The Gabelli Small | New World vs. Jhancock Diversified Macro |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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