Correlation Between Dws Government and Emerging Markets

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

By analyzing existing cross correlation between Dws Government Money and Emerging Markets Growth, you can compare the effects of market volatilities on Dws Government and Emerging Markets 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 Dws Government with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dws Government and Emerging Markets.

Diversification Opportunities for Dws Government and Emerging Markets

0.0

Correlation Coefficient

Dws Government  Emerging Markets

Pay attention - limited upside

The 3 months correlation between Dws and Emerging is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dws Government Money and Emerging Markets Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Growth and Dws Government 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 Dws Government Money are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Growth has no effect on the direction of Dws Government i.e., Dws Government and Emerging Markets go up and down completely randomly.

Pair Corralation between Dws Government and Emerging Markets

Assuming the 90 days horizon Dws Government Money is expected to under-perform the Emerging Markets. In addition to that, Dws Government is 4.9 times more volatile than Emerging Markets Growth. It trades about -0.06 of its total potential returns per unit of risk. Emerging Markets Growth is currently generating about 0.01 per unit of volatility. If you would invest  660.00  in Emerging Markets Growth on October 9, 2024 and sell it today you would earn a total of  12.00  from holding Emerging Markets Growth or generate 1.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	53.74%
Values	Daily Returns

Dws Government Money  vs.  Emerging Markets Growth

Dws Government Money

Risk-Adjusted Performance

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Very Weak

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

Emerging Markets Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Dws Government and Emerging Markets

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

The idea behind Dws Government Money and Emerging Markets Growth 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.