Correlation Between Deka MSCI and Deka Deutsche

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

By analyzing existing cross correlation between Deka MSCI World and Deka Deutsche Boerse, you can compare the effects of market volatilities on Deka MSCI and Deka Deutsche 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 Deka MSCI with a short position of Deka Deutsche. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deka MSCI and Deka Deutsche.

Diversification Opportunities for Deka MSCI and Deka Deutsche

0.46

Correlation Coefficient

Deka MSCI  Deka Deutsche

Very weak diversification

The 3 months correlation between Deka and Deka is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Deka MSCI World and Deka Deutsche Boerse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deka Deutsche Boerse and Deka MSCI 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 Deka MSCI World are associated (or correlated) with Deka Deutsche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deka Deutsche Boerse has no effect on the direction of Deka MSCI i.e., Deka MSCI and Deka Deutsche go up and down completely randomly.

Pair Corralation between Deka MSCI and Deka Deutsche

Assuming the 90 days trading horizon Deka MSCI World is expected to generate 4.06 times more return on investment than Deka Deutsche. However, Deka MSCI is 4.06 times more volatile than Deka Deutsche Boerse. It trades about 0.21 of its potential returns per unit of risk. Deka Deutsche Boerse is currently generating about -0.24 per unit of risk. If you would invest  3,657  in Deka MSCI World on October 23, 2024 and sell it today you would earn a total of  83.00  from holding Deka MSCI World or generate 2.27% return on investment over 90 days.

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

Deka MSCI World  vs.  Deka Deutsche Boerse

Deka MSCI World

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deka MSCI World are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Deka MSCI may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Deka Deutsche Boerse

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deka Deutsche Boerse has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Deka Deutsche is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Deka MSCI and Deka Deutsche

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

The idea behind Deka MSCI World and Deka Deutsche Boerse 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .