Correlation Between Deutsche Global and VivoPower International

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

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

Diversification Opportunities for Deutsche Global and VivoPower International

0.4

Correlation Coefficient

Deutsche Global  VivoPower International

Very weak diversification

The 3 months correlation between Deutsche and VivoPower is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Global Inflation and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International and Deutsche Global 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 Global Inflation are associated (or correlated) with VivoPower International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VivoPower International has no effect on the direction of Deutsche Global i.e., Deutsche Global and VivoPower International go up and down completely randomly.

Pair Corralation between Deutsche Global and VivoPower International

Assuming the 90 days horizon Deutsche Global Inflation is expected to under-perform the VivoPower International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Deutsche Global Inflation is 50.92 times less risky than VivoPower International. The mutual fund trades about -0.11 of its potential returns per unit of risk. The VivoPower International PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  191.00  in VivoPower International PLC on September 14, 2024 and sell it today you would lose (67.00) from holding VivoPower International PLC or give up 35.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Deutsche Global Inflation  vs.  VivoPower International PLC

Deutsche Global Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

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

VivoPower International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VivoPower International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, VivoPower International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Deutsche Global and VivoPower International

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

The idea behind Deutsche Global Inflation and VivoPower International PLC 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..