Correlation Between Small Cap and Deutsche Multi

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

Diversification Opportunities for Small Cap and Deutsche Multi

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Small and Deutsche is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Deutsche Multi Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Multi Asset and Small Cap 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 Small Cap Stock are associated (or correlated) with Deutsche Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Multi Asset has no effect on the direction of Small Cap i.e., Small Cap and Deutsche Multi go up and down completely randomly.

Pair Corralation between Small Cap and Deutsche Multi

Assuming the 90 days horizon Small Cap Stock is expected to under-perform the Deutsche Multi. In addition to that, Small Cap is 2.14 times more volatile than Deutsche Multi Asset Global. It trades about -0.04 of its total potential returns per unit of risk. Deutsche Multi Asset Global is currently generating about 0.14 per unit of volatility. If you would invest  1,868  in Deutsche Multi Asset Global on September 13, 2024 and sell it today you would earn a total of  25.00  from holding Deutsche Multi Asset Global or generate 1.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

Small Cap Stock  vs.  Deutsche Multi Asset Global

 Performance 
       Timeline  
Small Cap Stock 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Stock are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Deutsche Multi Asset 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Multi Asset Global are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Deutsche Multi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Small Cap and Deutsche Multi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Small Cap and Deutsche Multi

The main advantage of trading using opposite Small Cap and Deutsche Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Deutsche Multi 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 Multi will offset losses from the drop in Deutsche Multi's long position.
The idea behind Small Cap Stock and Deutsche Multi Asset Global 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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