Correlation Between Nasdaq and Deutsche Multi-asset

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

By analyzing existing cross correlation between Nasdaq Inc and Deutsche Multi Asset Servative, you can compare the effects of market volatilities on Nasdaq and Deutsche Multi-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 Nasdaq with a short position of Deutsche Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Deutsche Multi-asset.

Diversification Opportunities for Nasdaq and Deutsche Multi-asset

0.39

Correlation Coefficient

Nasdaq  Deutsche Multi-asset

Weak diversification

The 3 months correlation between Nasdaq and Deutsche is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Deutsche Multi Asset Servative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Multi Asset and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Deutsche Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Multi Asset has no effect on the direction of Nasdaq i.e., Nasdaq and Deutsche Multi-asset go up and down completely randomly.

Pair Corralation between Nasdaq and Deutsche Multi-asset

Given the investment horizon of 90 days Nasdaq is expected to generate 3.71 times less return on investment than Deutsche Multi-asset. In addition to that, Nasdaq is 3.49 times more volatile than Deutsche Multi Asset Servative. It trades about 0.01 of its total potential returns per unit of risk. Deutsche Multi Asset Servative is currently generating about 0.11 per unit of volatility. If you would invest  1,300  in Deutsche Multi Asset Servative on December 4, 2024 and sell it today you would earn a total of  11.00  from holding Deutsche Multi Asset Servative or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Nasdaq Inc  vs.  Deutsche Multi Asset Servative

Nasdaq Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Deutsche Multi Asset

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nasdaq and Deutsche Multi-asset

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

The idea behind Nasdaq Inc and Deutsche Multi Asset Servative 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.