Correlation Between Deutsche Health and Gateway Fund

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

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

Diversification Opportunities for Deutsche Health and Gateway Fund

-0.48

Correlation Coefficient

Deutsche Health  Gateway Fund

Very good diversification

The 3 months correlation between Deutsche and Gateway is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Health And and Gateway Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Fund Class and Deutsche Health 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 Health And are associated (or correlated) with Gateway Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Fund Class has no effect on the direction of Deutsche Health i.e., Deutsche Health and Gateway Fund go up and down completely randomly.

Pair Corralation between Deutsche Health and Gateway Fund

Assuming the 90 days horizon Deutsche Health is expected to generate 4.53 times less return on investment than Gateway Fund. In addition to that, Deutsche Health is 1.66 times more volatile than Gateway Fund Class. It trades about 0.02 of its total potential returns per unit of risk. Gateway Fund Class is currently generating about 0.12 per unit of volatility. If you would invest  3,595  in Gateway Fund Class on October 11, 2024 and sell it today you would earn a total of  1,057  from holding Gateway Fund Class or generate 29.4% return on investment over 90 days.

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

Deutsche Health And  vs.  Gateway Fund Class

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.

Gateway Fund Class

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gateway Fund Class are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Gateway Fund 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 Health and Gateway Fund

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

The idea behind Deutsche Health And and Gateway Fund Class 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.