Correlation Between BGF Euro and DWS Aktien

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

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

Diversification Opportunities for BGF Euro and DWS Aktien

0.77

Correlation Coefficient

BGF Euro  DWS Aktien

Poor diversification

The 3 months correlation between BGF and DWS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding BGF Euro Markets and DWS Aktien Strategie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Aktien Strategie and BGF Euro 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 BGF Euro Markets are associated (or correlated) with DWS Aktien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Aktien Strategie has no effect on the direction of BGF Euro i.e., BGF Euro and DWS Aktien go up and down completely randomly.

Pair Corralation between BGF Euro and DWS Aktien

Assuming the 90 days trading horizon BGF Euro is expected to generate 1.03 times less return on investment than DWS Aktien. In addition to that, BGF Euro is 1.24 times more volatile than DWS Aktien Strategie. It trades about 0.21 of its total potential returns per unit of risk. DWS Aktien Strategie is currently generating about 0.27 per unit of volatility. If you would invest  49,878  in DWS Aktien Strategie on September 15, 2024 and sell it today you would earn a total of  1,866  from holding DWS Aktien Strategie or generate 3.74% return on investment over 90 days.

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

BGF Euro Markets  vs.  DWS Aktien Strategie

BGF Euro Markets

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BGF Euro Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, BGF Euro is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

DWS Aktien Strategie

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DWS Aktien Strategie are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, DWS Aktien is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BGF Euro and DWS Aktien

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

The idea behind BGF Euro Markets and DWS Aktien Strategie 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.