Correlation Between DWS Municipal and Aquagold International
Can any of the company-specific risk be diversified away by investing in both DWS Municipal and Aquagold 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 DWS Municipal and Aquagold International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DWS Municipal Income and Aquagold International, you can compare the effects of market volatilities on DWS Municipal and Aquagold 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 DWS Municipal with a short position of Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and Aquagold International.
Diversification Opportunities for DWS Municipal and Aquagold International
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DWS and Aquagold is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and DWS Municipal 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 Municipal Income are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of DWS Municipal i.e., DWS Municipal and Aquagold International go up and down completely randomly.
Pair Corralation between DWS Municipal and Aquagold International
Considering the 90-day investment horizon DWS Municipal Income is expected to generate 0.02 times more return on investment than Aquagold International. However, DWS Municipal Income is 40.69 times less risky than Aquagold International. It trades about -0.42 of its potential returns per unit of risk. Aquagold International is currently generating about -0.22 per unit of risk. If you would invest 986.00 in DWS Municipal Income on September 25, 2024 and sell it today you would lose (42.00) from holding DWS Municipal Income or give up 4.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
DWS Municipal Income vs. Aquagold International
Performance |
Timeline |
DWS Municipal Income |
Aquagold International |
DWS Municipal and Aquagold International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DWS Municipal and Aquagold International
The main advantage of trading using opposite DWS Municipal and Aquagold International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DWS Municipal position performs unexpectedly, Aquagold 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 Aquagold International will offset losses from the drop in Aquagold International's long position.DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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