Correlation Between Deutsche Real and Us Real

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

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

Diversification Opportunities for Deutsche Real and Us Real

0.88

Correlation Coefficient

Deutsche Real  Us Real

Very poor diversification

The 3 months correlation between Deutsche and MUSDX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Real Estate and Us Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Real Estate and Deutsche Real 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 Real Estate are associated (or correlated) with Us Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Real Estate has no effect on the direction of Deutsche Real i.e., Deutsche Real and Us Real go up and down completely randomly.

Pair Corralation between Deutsche Real and Us Real

Assuming the 90 days horizon Deutsche Real is expected to generate 1.42 times less return on investment than Us Real. In addition to that, Deutsche Real is 1.29 times more volatile than Us Real Estate. It trades about 0.1 of its total potential returns per unit of risk. Us Real Estate is currently generating about 0.18 per unit of volatility. If you would invest  899.00  in Us Real Estate on August 15, 2024 and sell it today you would earn a total of  70.00  from holding Us Real Estate or generate 7.79% return on investment over 90 days.

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

Deutsche Real Estate  vs.  Us Real Estate

Deutsche Real Estate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Real Estate are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Deutsche Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Us Real Estate

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us Real Estate are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Us Real may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Deutsche Real and Us Real

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

The idea behind Deutsche Real Estate and Us Real Estate 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.