Correlation Between Deutsche E and Europac Gold

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Can any of the company-specific risk be diversified away by investing in both Deutsche E and Europac Gold 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 E and Europac Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche E Equity and Europac Gold Fund, you can compare the effects of market volatilities on Deutsche E and Europac Gold 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 E with a short position of Europac Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche E and Europac Gold.

Diversification Opportunities for Deutsche E and Europac Gold

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Deutsche and Europac is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche E Equity and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold and Deutsche E 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 E Equity are associated (or correlated) with Europac Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac Gold has no effect on the direction of Deutsche E i.e., Deutsche E and Europac Gold go up and down completely randomly.

Pair Corralation between Deutsche E and Europac Gold

Assuming the 90 days horizon Deutsche E Equity is expected to generate 0.18 times more return on investment than Europac Gold. However, Deutsche E Equity is 5.56 times less risky than Europac Gold. It trades about 0.16 of its potential returns per unit of risk. Europac Gold Fund is currently generating about -0.05 per unit of risk. If you would invest  3,813  in Deutsche E Equity on September 13, 2024 and sell it today you would earn a total of  66.00  from holding Deutsche E Equity or generate 1.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Deutsche E Equity  vs.  Europac Gold Fund

 Performance 
       Timeline  
Deutsche E Equity 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche E Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Deutsche E may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Europac Gold 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Europac Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Deutsche E and Europac Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deutsche E and Europac Gold

The main advantage of trading using opposite Deutsche E and Europac Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche E position performs unexpectedly, Europac Gold 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 Europac Gold will offset losses from the drop in Europac Gold's long position.
The idea behind Deutsche E Equity and Europac Gold Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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