Correlation Between RTW Venture and Deutsche Post

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

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

Diversification Opportunities for RTW Venture and Deutsche Post

-0.32

Correlation Coefficient

RTW Venture  Deutsche Post

Very good diversification

The 3 months correlation between RTW and Deutsche is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding RTW Venture Fund and Deutsche Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Post AG and RTW Venture 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 RTW Venture Fund are associated (or correlated) with Deutsche Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Post AG has no effect on the direction of RTW Venture i.e., RTW Venture and Deutsche Post go up and down completely randomly.

Pair Corralation between RTW Venture and Deutsche Post

Assuming the 90 days trading horizon RTW Venture Fund is expected to under-perform the Deutsche Post. But the stock apears to be less risky and, when comparing its historical volatility, RTW Venture Fund is 1.04 times less risky than Deutsche Post. The stock trades about -0.11 of its potential returns per unit of risk. The Deutsche Post AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,489  in Deutsche Post AG on December 1, 2024 and sell it today you would earn a total of  284.00  from holding Deutsche Post AG or generate 8.14% return on investment over 90 days.

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

RTW Venture Fund  vs.  Deutsche Post AG

RTW Venture Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days RTW Venture Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Deutsche Post AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Post AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Deutsche Post may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with RTW Venture and Deutsche Post

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

The idea behind RTW Venture Fund and Deutsche Post AG 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.