Correlation Between Deutsche Gold and Large Cap

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

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

Diversification Opportunities for Deutsche Gold and Large Cap

0.41

Correlation Coefficient

Deutsche Gold  Large Cap

Very weak diversification

The 3 months correlation between Deutsche and Large is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Gold Precious and Large Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Value and Deutsche Gold 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 Gold Precious are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Value has no effect on the direction of Deutsche Gold i.e., Deutsche Gold and Large Cap go up and down completely randomly.

Pair Corralation between Deutsche Gold and Large Cap

Assuming the 90 days horizon Deutsche Gold Precious is expected to generate 1.34 times more return on investment than Large Cap. However, Deutsche Gold is 1.34 times more volatile than Large Cap Value. It trades about 0.19 of its potential returns per unit of risk. Large Cap Value is currently generating about 0.06 per unit of risk. If you would invest  5,810  in Deutsche Gold Precious on March 3, 2025 and sell it today you would earn a total of  1,763  from holding Deutsche Gold Precious or generate 30.34% return on investment over 90 days.

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

Deutsche Gold Precious  vs.  Large Cap Value

Deutsche Gold Precious

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Gold Precious are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Deutsche Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Large Cap Value

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Value are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Large Cap may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with Deutsche Gold and Large Cap

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

The idea behind Deutsche Gold Precious and Large Cap Value 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.