Correlation Between Deutsche Enhanced and Deutsche E

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

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

Diversification Opportunities for Deutsche Enhanced and Deutsche E

0.67

Correlation Coefficient

Deutsche Enhanced  Deutsche E

Poor diversification

The 3 months correlation between Deutsche and Deutsche is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Enhanced Emerging and Deutsche E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche E Equity and Deutsche Enhanced 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 Enhanced Emerging are associated (or correlated) with Deutsche E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche E Equity has no effect on the direction of Deutsche Enhanced i.e., Deutsche Enhanced and Deutsche E go up and down completely randomly.

Pair Corralation between Deutsche Enhanced and Deutsche E

Assuming the 90 days horizon Deutsche Enhanced is expected to generate 2.1 times less return on investment than Deutsche E. But when comparing it to its historical volatility, Deutsche Enhanced Emerging is 2.48 times less risky than Deutsche E. It trades about 0.1 of its potential returns per unit of risk. Deutsche E Equity is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,434  in Deutsche E Equity on September 26, 2024 and sell it today you would earn a total of  1,077  from holding Deutsche E Equity or generate 44.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Deutsche Enhanced Emerging  vs.  Deutsche E Equity

Deutsche Enhanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Deutsche E Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Deutsche Enhanced and Deutsche E

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

The idea behind Deutsche Enhanced Emerging and Deutsche E Equity 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.