Correlation Between Dws Emerging and Strategic Allocation

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

By analyzing existing cross correlation between Dws Emerging Markets and Strategic Allocation Moderate, you can compare the effects of market volatilities on Dws Emerging and Strategic Allocation 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 Dws Emerging with a short position of Strategic Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dws Emerging and Strategic Allocation.

Diversification Opportunities for Dws Emerging and Strategic Allocation

0.25

Correlation Coefficient

Dws Emerging  Strategic Allocation

Modest diversification

The 3 months correlation between Dws and Strategic is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dws Emerging Markets and Strategic Allocation Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Allocation and Dws Emerging 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 Dws Emerging Markets are associated (or correlated) with Strategic Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Allocation has no effect on the direction of Dws Emerging i.e., Dws Emerging and Strategic Allocation go up and down completely randomly.

Pair Corralation between Dws Emerging and Strategic Allocation

Assuming the 90 days horizon Dws Emerging Markets is expected to generate 1.64 times more return on investment than Strategic Allocation. However, Dws Emerging is 1.64 times more volatile than Strategic Allocation Moderate. It trades about 0.06 of its potential returns per unit of risk. Strategic Allocation Moderate is currently generating about 0.05 per unit of risk. If you would invest  1,639  in Dws Emerging Markets on October 9, 2024 and sell it today you would earn a total of  218.00  from holding Dws Emerging Markets or generate 13.3% return on investment over 90 days.

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

Dws Emerging Markets  vs.  Strategic Allocation Moderate

Dws Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Strategic Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dws Emerging and Strategic Allocation

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

The idea behind Dws Emerging Markets and Strategic Allocation Moderate 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.