Correlation Between Dws Government and Small Cap

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

By analyzing existing cross correlation between Dws Government Money and Small Cap Growth, you can compare the effects of market volatilities on Dws Government and Small Cap 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 Dws Government with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dws Government and Small Cap.

Diversification Opportunities for Dws Government and Small Cap

0.0

Correlation Coefficient

Dws Government  Small Cap

Pay attention - limited upside

The 3 months correlation between Dws and Small is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dws Government Money and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Dws Government 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 Dws Government Money are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Dws Government i.e., Dws Government and Small Cap go up and down completely randomly.

Pair Corralation between Dws Government and Small Cap

Assuming the 90 days horizon Dws Government Money is expected to under-perform the Small Cap. In addition to that, Dws Government is 3.89 times more volatile than Small Cap Growth. It trades about -0.06 of its total potential returns per unit of risk. Small Cap Growth is currently generating about 0.05 per unit of volatility. If you would invest  1,302  in Small Cap Growth on September 16, 2024 and sell it today you would earn a total of  354.00  from holding Small Cap Growth or generate 27.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	51.99%
Values	Daily Returns

Dws Government Money  vs.  Small Cap Growth

Dws Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

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

Small Cap Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dws Government and Small Cap

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

The idea behind Dws Government Money and Small Cap Growth 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.