Correlation Between Income Growth and DEUTSCHE MID

Can any of the company-specific risk be diversified away by investing in both Income Growth and DEUTSCHE MID 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 Income Growth and DEUTSCHE MID into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Income Growth Fund and DEUTSCHE MID CAP, you can compare the effects of market volatilities on Income Growth and DEUTSCHE MID 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 Income Growth with a short position of DEUTSCHE MID. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and DEUTSCHE MID.

Diversification Opportunities for Income Growth and DEUTSCHE MID

-0.12

Correlation Coefficient

Income Growth  DEUTSCHE MID

Good diversification

The 3 months correlation between Income and DEUTSCHE is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and DEUTSCHE MID CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE MID CAP and Income Growth 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 Income Growth Fund are associated (or correlated) with DEUTSCHE MID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE MID CAP has no effect on the direction of Income Growth i.e., Income Growth and DEUTSCHE MID go up and down completely randomly.

Pair Corralation between Income Growth and DEUTSCHE MID

Assuming the 90 days horizon Income Growth Fund is expected to under-perform the DEUTSCHE MID. In addition to that, Income Growth is 3.69 times more volatile than DEUTSCHE MID CAP. It trades about -0.05 of its total potential returns per unit of risk. DEUTSCHE MID CAP is currently generating about 0.06 per unit of volatility. If you would invest  904.00  in DEUTSCHE MID CAP on December 30, 2024 and sell it today you would earn a total of  7.00  from holding DEUTSCHE MID CAP or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Income Growth Fund  vs.  DEUTSCHE MID CAP

Income Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Income Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Income Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DEUTSCHE MID CAP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DEUTSCHE MID CAP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, DEUTSCHE MID is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Income Growth and DEUTSCHE MID

The main advantage of trading using opposite Income Growth and DEUTSCHE MID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth position performs unexpectedly, DEUTSCHE MID 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 MID will offset losses from the drop in DEUTSCHE MID's long position.

The idea behind Income Growth Fund and DEUTSCHE MID CAP 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.