Correlation Between Europac Gold and Deutsche Gold

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

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

Diversification Opportunities for Europac Gold and Deutsche Gold

0.94

Correlation Coefficient

Europac Gold  Deutsche Gold

Almost no diversification

The 3 months correlation between Europac and Deutsche is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Deutsche Gold Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Gold Precious and Europac Gold 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 Europac Gold Fund are associated (or correlated) with Deutsche Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Gold Precious has no effect on the direction of Europac Gold i.e., Europac Gold and Deutsche Gold go up and down completely randomly.

Pair Corralation between Europac Gold and Deutsche Gold

Assuming the 90 days horizon Europac Gold Fund is expected to under-perform the Deutsche Gold. In addition to that, Europac Gold is 1.09 times more volatile than Deutsche Gold Precious. It trades about -0.12 of its total potential returns per unit of risk. Deutsche Gold Precious is currently generating about -0.1 per unit of volatility. If you would invest  6,198  in Deutsche Gold Precious on October 24, 2024 and sell it today you would lose (660.00) from holding Deutsche Gold Precious or give up 10.65% of portfolio value over 90 days.

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

Europac Gold Fund  vs.  Deutsche Gold Precious

Europac Gold

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Deutsche Gold Precious

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Europac Gold and Deutsche Gold

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

The idea behind Europac Gold Fund and Deutsche Gold Precious 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.