Correlation Between ETC 6 and DWS

Can any of the company-specific risk be diversified away by investing in both ETC 6 and DWS 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 ETC 6 and DWS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETC 6 Meridian and DWS, you can compare the effects of market volatilities on ETC 6 and DWS 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 ETC 6 with a short position of DWS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC 6 and DWS.

Diversification Opportunities for ETC 6 and DWS

-0.19

Correlation Coefficient

ETC 6  DWS

Good diversification

The 3 months correlation between ETC and DWS is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding ETC 6 Meridian and DWS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS and ETC 6 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 ETC 6 Meridian are associated (or correlated) with DWS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS has no effect on the direction of ETC 6 i.e., ETC 6 and DWS go up and down completely randomly.

Pair Corralation between ETC 6 and DWS

If you would invest  3,530  in ETC 6 Meridian on September 29, 2024 and sell it today you would earn a total of  165.00  from holding ETC 6 Meridian or generate 4.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

ETC 6 Meridian  vs.  DWS

ETC 6 Meridian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETC 6 Meridian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, ETC 6 is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

DWS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DWS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, DWS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ETC 6 and DWS

The main advantage of trading using opposite ETC 6 and DWS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETC 6 position performs unexpectedly, DWS 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 DWS will offset losses from the drop in DWS's long position.

The idea behind ETC 6 Meridian and DWS 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.