Correlation Between Deutsche Global and Deutsche Munications

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

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

Diversification Opportunities for Deutsche Global and Deutsche Munications

-0.36

Correlation Coefficient

Deutsche Global  Deutsche Munications

Very good diversification

The 3 months correlation between Deutsche and Deutsche is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Global Income and Deutsche Munications Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Munications and Deutsche Global 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 Global Income are associated (or correlated) with Deutsche Munications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Munications has no effect on the direction of Deutsche Global i.e., Deutsche Global and Deutsche Munications go up and down completely randomly.

Pair Corralation between Deutsche Global and Deutsche Munications

Assuming the 90 days horizon Deutsche Global Income is expected to under-perform the Deutsche Munications. In addition to that, Deutsche Global is 2.19 times more volatile than Deutsche Munications Fund. It trades about -0.25 of its total potential returns per unit of risk. Deutsche Munications Fund is currently generating about 0.09 per unit of volatility. If you would invest  3,900  in Deutsche Munications Fund on September 24, 2024 and sell it today you would earn a total of  73.00  from holding Deutsche Munications Fund or generate 1.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Deutsche Global Income  vs.  Deutsche Munications Fund

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 forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Deutsche Munications

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Munications Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Deutsche Munications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Deutsche Global and Deutsche Munications

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

The idea behind Deutsche Global Income and Deutsche Munications Fund 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.