Correlation Between Mid Cap and Deutsche Health

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

By analyzing existing cross correlation between Mid Cap 15x Strategy and Deutsche Health And, you can compare the effects of market volatilities on Mid Cap and Deutsche Health 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 Mid Cap with a short position of Deutsche Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Deutsche Health.

Diversification Opportunities for Mid Cap and Deutsche Health

-0.28

Correlation Coefficient

Mid Cap  Deutsche Health

Very good diversification

The 3 months correlation between Mid and Deutsche is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Deutsche Health And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Health And and Mid Cap 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 Mid Cap 15x Strategy are associated (or correlated) with Deutsche Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Health And has no effect on the direction of Mid Cap i.e., Mid Cap and Deutsche Health go up and down completely randomly.

Pair Corralation between Mid Cap and Deutsche Health

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 2.05 times more return on investment than Deutsche Health. However, Mid Cap is 2.05 times more volatile than Deutsche Health And. It trades about 0.0 of its potential returns per unit of risk. Deutsche Health And is currently generating about -0.23 per unit of risk. If you would invest  13,335  in Mid Cap 15x Strategy on September 24, 2024 and sell it today you would lose (155.00) from holding Mid Cap 15x Strategy or give up 1.16% of portfolio value over 90 days.

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

Mid Cap 15x Strategy  vs.  Deutsche Health And

Mid Cap 15x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Cap 15x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Deutsche Health And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Health And has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Mid Cap and Deutsche Health

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

The idea behind Mid Cap 15x Strategy and Deutsche Health And 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.