Correlation Between Deutsche Gold and Global Gold

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

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

Diversification Opportunities for Deutsche Gold and Global Gold

0.99

Correlation Coefficient

Deutsche Gold  Global Gold

No risk reduction

The 3 months correlation between Deutsche and Global is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Gold Precious and Global Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Gold Fund and Deutsche Gold 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 Gold Precious are associated (or correlated) with Global Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Gold Fund has no effect on the direction of Deutsche Gold i.e., Deutsche Gold and Global Gold go up and down completely randomly.

Pair Corralation between Deutsche Gold and Global Gold

Assuming the 90 days horizon Deutsche Gold is expected to generate 1.21 times less return on investment than Global Gold. In addition to that, Deutsche Gold is 1.03 times more volatile than Global Gold Fund. It trades about 0.24 of its total potential returns per unit of risk. Global Gold Fund is currently generating about 0.3 per unit of volatility. If you would invest  1,186  in Global Gold Fund on December 21, 2024 and sell it today you would earn a total of  380.00  from holding Global Gold Fund or generate 32.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Deutsche Gold Precious  vs.  Global Gold Fund

Deutsche Gold Precious

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Gold Precious are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Deutsche Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Global Gold Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Gold Fund are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Gold and Global Gold

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

The idea behind Deutsche Gold Precious and Global Gold Fund 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.