Correlation Between DWS Municipal and Silvercrest Asset

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

By analyzing existing cross correlation between DWS Municipal Income and Silvercrest Asset Management, you can compare the effects of market volatilities on DWS Municipal and Silvercrest Asset 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 Municipal with a short position of Silvercrest Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and Silvercrest Asset.

Diversification Opportunities for DWS Municipal and Silvercrest Asset

-0.18

Correlation Coefficient

DWS Municipal  Silvercrest Asset

Good diversification

The 3 months correlation between DWS and Silvercrest is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and Silvercrest Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercrest Asset and DWS Municipal 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 Municipal Income are associated (or correlated) with Silvercrest Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercrest Asset has no effect on the direction of DWS Municipal i.e., DWS Municipal and Silvercrest Asset go up and down completely randomly.

Pair Corralation between DWS Municipal and Silvercrest Asset

Considering the 90-day investment horizon DWS Municipal Income is expected to under-perform the Silvercrest Asset. But the stock apears to be less risky and, when comparing its historical volatility, DWS Municipal Income is 4.83 times less risky than Silvercrest Asset. The stock trades about -0.39 of its potential returns per unit of risk. The Silvercrest Asset Management is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,755  in Silvercrest Asset Management on October 8, 2024 and sell it today you would earn a total of  73.00  from holding Silvercrest Asset Management or generate 4.16% return on investment over 90 days.

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

DWS Municipal Income  vs.  Silvercrest Asset Management

DWS Municipal Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DWS Municipal Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DWS Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Silvercrest Asset

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silvercrest Asset Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Silvercrest Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DWS Municipal and Silvercrest Asset

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

The idea behind DWS Municipal Income and Silvercrest Asset Management 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.