Correlation Between Deutsche Core and Deutsche Large

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

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

Diversification Opportunities for Deutsche Core and Deutsche Large

-0.59

Correlation Coefficient

Deutsche Core  Deutsche Large

Excellent diversification

The 3 months correlation between Deutsche and Deutsche is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche E Plus and Deutsche Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Large Cap and Deutsche Core 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 E Plus are associated (or correlated) with Deutsche Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Large Cap has no effect on the direction of Deutsche Core i.e., Deutsche Core and Deutsche Large go up and down completely randomly.

Pair Corralation between Deutsche Core and Deutsche Large

Assuming the 90 days horizon Deutsche E Plus is expected to generate 0.19 times more return on investment than Deutsche Large. However, Deutsche E Plus is 5.37 times less risky than Deutsche Large. It trades about 0.09 of its potential returns per unit of risk. Deutsche Large Cap is currently generating about -0.12 per unit of risk. If you would invest  919.00  in Deutsche E Plus on December 30, 2024 and sell it today you would earn a total of  14.00  from holding Deutsche E Plus or generate 1.52% return on investment over 90 days.

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

Deutsche E Plus  vs.  Deutsche Large Cap

Deutsche E Plus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche E Plus are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Deutsche Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Deutsche Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deutsche Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Deutsche Core and Deutsche Large

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

The idea behind Deutsche E Plus and Deutsche Large Cap 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.