Correlation Between Deutsche Core and Deutsche Managed

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

By analyzing existing cross correlation between Deutsche E Plus and Deutsche Managed Municipal, you can compare the effects of market volatilities on Deutsche Core and Deutsche Managed 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 Core with a short position of Deutsche Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Core and Deutsche Managed.

Diversification Opportunities for Deutsche Core and Deutsche Managed

0.63

Correlation Coefficient

Deutsche Core  Deutsche Managed

Poor diversification

The 3 months correlation between Deutsche and Deutsche is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche E Plus and Deutsche Managed Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Managed Mun and Deutsche Core 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 E Plus are associated (or correlated) with Deutsche Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Managed Mun has no effect on the direction of Deutsche Core i.e., Deutsche Core and Deutsche Managed go up and down completely randomly.

Pair Corralation between Deutsche Core and Deutsche Managed

Assuming the 90 days horizon Deutsche E Plus is expected to under-perform the Deutsche Managed. In addition to that, Deutsche Core is 1.15 times more volatile than Deutsche Managed Municipal. It trades about -0.03 of its total potential returns per unit of risk. Deutsche Managed Municipal is currently generating about 0.07 per unit of volatility. If you would invest  816.00  in Deutsche Managed Municipal on September 2, 2024 and sell it today you would earn a total of  10.00  from holding Deutsche Managed Municipal or generate 1.23% return on investment over 90 days.

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

Deutsche E Plus  vs.  Deutsche Managed Municipal

Deutsche E Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Deutsche Managed Mun

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Managed Municipal are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Deutsche Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Deutsche Core and Deutsche Managed

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

The idea behind Deutsche E Plus and Deutsche Managed Municipal 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .