Correlation Between Deutsche Gold and Asset Allocation

Can any of the company-specific risk be diversified away by investing in both Deutsche Gold and Asset Allocation 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 Asset Allocation 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 Asset Allocation Fund, you can compare the effects of market volatilities on Deutsche Gold and Asset Allocation 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 Asset Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Gold and Asset Allocation.

Diversification Opportunities for Deutsche Gold and Asset Allocation

0.89

Correlation Coefficient

Deutsche Gold  Asset Allocation

Very poor diversification

The 3 months correlation between Deutsche and Asset is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Gold Precious and Asset Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asset Allocation 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 Asset Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asset Allocation has no effect on the direction of Deutsche Gold i.e., Deutsche Gold and Asset Allocation go up and down completely randomly.

Pair Corralation between Deutsche Gold and Asset Allocation

Assuming the 90 days horizon Deutsche Gold Precious is expected to generate 5.14 times more return on investment than Asset Allocation. However, Deutsche Gold is 5.14 times more volatile than Asset Allocation Fund. It trades about 0.26 of its potential returns per unit of risk. Asset Allocation Fund is currently generating about 0.17 per unit of risk. If you would invest  7,721  in Deutsche Gold Precious on August 3, 2025 and sell it today you would earn a total of  3,064  from holding Deutsche Gold Precious or generate 39.68% return on investment over 90 days.

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

Deutsche Gold Precious  vs.  Asset Allocation Fund

Deutsche Gold Precious

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Gold Precious are ranked lower than 20 (%) 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.

Asset Allocation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asset Allocation Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Asset Allocation 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 Gold and Asset Allocation

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

The idea behind Deutsche Gold Precious and Asset Allocation Fund 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.