Correlation Between Deutsche Gnma and Deutsche Global

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

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

Diversification Opportunities for Deutsche Gnma and Deutsche Global

0.7

Correlation Coefficient

Deutsche Gnma  Deutsche Global

Poor diversification

The 3 months correlation between Deutsche and Deutsche is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Gnma Fund and Deutsche Global Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Global Income and Deutsche Gnma 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 Gnma Fund are associated (or correlated) with Deutsche Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Global Income has no effect on the direction of Deutsche Gnma i.e., Deutsche Gnma and Deutsche Global go up and down completely randomly.

Pair Corralation between Deutsche Gnma and Deutsche Global

Assuming the 90 days horizon Deutsche Gnma Fund is expected to generate 0.25 times more return on investment than Deutsche Global. However, Deutsche Gnma Fund is 4.01 times less risky than Deutsche Global. It trades about -0.14 of its potential returns per unit of risk. Deutsche Global Income is currently generating about -0.16 per unit of risk. If you would invest  1,171  in Deutsche Gnma Fund on October 15, 2024 and sell it today you would lose (37.00) from holding Deutsche Gnma Fund or give up 3.16% of portfolio value over 90 days.

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

Deutsche Gnma Fund  vs.  Deutsche Global Income

Deutsche Gnma

Risk-Adjusted Performance

0 of 100

Very Weak

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

Deutsche Global Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Global Income 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 basic 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.

Pair Trading with Deutsche Gnma and Deutsche Global

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

The idea behind Deutsche Gnma Fund and Deutsche Global Income 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.