Correlation Between Lgm Risk and Deutsche Communications

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

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

Diversification Opportunities for Lgm Risk and Deutsche Communications

0.79

Correlation Coefficient

Lgm Risk  Deutsche Communications

Poor diversification

The 3 months correlation between Lgm and Deutsche is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lgm Risk Managed and Deutsche Munications Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Communications and Lgm Risk 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 Lgm Risk Managed are associated (or correlated) with Deutsche Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Communications has no effect on the direction of Lgm Risk i.e., Lgm Risk and Deutsche Communications go up and down completely randomly.

Pair Corralation between Lgm Risk and Deutsche Communications

Assuming the 90 days horizon Lgm Risk Managed is expected to generate 0.25 times more return on investment than Deutsche Communications. However, Lgm Risk Managed is 3.93 times less risky than Deutsche Communications. It trades about -0.05 of its potential returns per unit of risk. Deutsche Munications Fund is currently generating about -0.04 per unit of risk. If you would invest  1,133  in Lgm Risk Managed on December 20, 2024 and sell it today you would lose (12.00) from holding Lgm Risk Managed or give up 1.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Lgm Risk Managed  vs.  Deutsche Munications Fund

Lgm Risk Managed

Risk-Adjusted Performance

Very Weak

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

Deutsche Communications

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lgm Risk and Deutsche Communications

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

The idea behind Lgm Risk Managed 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.