Correlation Between Deutsche Gold and Voya Vacs

Can any of the company-specific risk be diversified away by investing in both Deutsche Gold and Voya Vacs 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 Voya Vacs 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 Voya Vacs Index, you can compare the effects of market volatilities on Deutsche Gold and Voya Vacs 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 Voya Vacs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Gold and Voya Vacs.

Diversification Opportunities for Deutsche Gold and Voya Vacs

-0.21

Correlation Coefficient

Deutsche Gold  Voya Vacs

Very good diversification

The 3 months correlation between Deutsche and Voya is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Gold Precious and Voya Vacs Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Vacs Index 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 Voya Vacs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Vacs Index has no effect on the direction of Deutsche Gold i.e., Deutsche Gold and Voya Vacs go up and down completely randomly.

Pair Corralation between Deutsche Gold and Voya Vacs

Assuming the 90 days horizon Deutsche Gold Precious is expected to generate 1.26 times more return on investment than Voya Vacs. However, Deutsche Gold is 1.26 times more volatile than Voya Vacs Index. It trades about 0.05 of its potential returns per unit of risk. Voya Vacs Index is currently generating about 0.06 per unit of risk. If you would invest  4,818  in Deutsche Gold Precious on October 12, 2024 and sell it today you would earn a total of  692.00  from holding Deutsche Gold Precious or generate 14.36% return on investment over 90 days.

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

Deutsche Gold Precious  vs.  Voya Vacs Index

Deutsche Gold Precious

Risk-Adjusted Performance

0 of 100

Very Weak

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

Voya Vacs Index

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Voya Vacs Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Voya Vacs 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 Gold and Voya Vacs

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

The idea behind Deutsche Gold Precious and Voya Vacs Index 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.