Correlation Between Vanguard Funds and Deka MDAX

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

By analyzing existing cross correlation between Vanguard Funds Public and Deka MDAX UCITS, you can compare the effects of market volatilities on Vanguard Funds and Deka MDAX 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 Vanguard Funds with a short position of Deka MDAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Funds and Deka MDAX.

Diversification Opportunities for Vanguard Funds and Deka MDAX

-0.68

Correlation Coefficient

Vanguard Funds  Deka MDAX

Excellent diversification

The 3 months correlation between Vanguard and Deka is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Funds Public and Deka MDAX UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deka MDAX UCITS and Vanguard Funds 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 Vanguard Funds Public are associated (or correlated) with Deka MDAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deka MDAX UCITS has no effect on the direction of Vanguard Funds i.e., Vanguard Funds and Deka MDAX go up and down completely randomly.

Pair Corralation between Vanguard Funds and Deka MDAX

Assuming the 90 days trading horizon Vanguard Funds Public is expected to under-perform the Deka MDAX. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Funds Public is 1.48 times less risky than Deka MDAX. The etf trades about -0.15 of its potential returns per unit of risk. The Deka MDAX UCITS is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  24,105  in Deka MDAX UCITS on December 24, 2024 and sell it today you would earn a total of  2,895  from holding Deka MDAX UCITS or generate 12.01% return on investment over 90 days.

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

Vanguard Funds Public  vs.  Deka MDAX UCITS

Vanguard Funds Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Funds Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Deka MDAX UCITS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deka MDAX UCITS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Deka MDAX may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vanguard Funds and Deka MDAX

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

The idea behind Vanguard Funds Public and Deka MDAX UCITS 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.