Correlation Between Peabody Energy and Deutsche Small
Can any of the company-specific risk be diversified away by investing in both Peabody Energy and Deutsche Small 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 Peabody Energy and Deutsche Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peabody Energy Corp and Deutsche Small Cap, you can compare the effects of market volatilities on Peabody Energy and Deutsche Small 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 Peabody Energy with a short position of Deutsche Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peabody Energy and Deutsche Small.
Diversification Opportunities for Peabody Energy and Deutsche Small
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Peabody and Deutsche is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Peabody Energy Corp and Deutsche Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Small Cap and Peabody Energy 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 Peabody Energy Corp are associated (or correlated) with Deutsche Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Small Cap has no effect on the direction of Peabody Energy i.e., Peabody Energy and Deutsche Small go up and down completely randomly.
Pair Corralation between Peabody Energy and Deutsche Small
Considering the 90-day investment horizon Peabody Energy is expected to generate 1.44 times less return on investment than Deutsche Small. In addition to that, Peabody Energy is 1.9 times more volatile than Deutsche Small Cap. It trades about 0.02 of its total potential returns per unit of risk. Deutsche Small Cap is currently generating about 0.05 per unit of volatility. If you would invest 2,982 in Deutsche Small Cap on January 21, 2024 and sell it today you would earn a total of 381.00 from holding Deutsche Small Cap or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Peabody Energy Corp vs. Deutsche Small Cap
Performance |
| Timeline |
| Peabody Energy Corp |
| Deutsche Small Cap |
Peabody Energy and Deutsche Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peabody Energy and Deutsche Small
The main advantage of trading using opposite Peabody Energy and Deutsche Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peabody Energy position performs unexpectedly, Deutsche Small 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 Small will offset losses from the drop in Deutsche Small's long position.The idea behind Peabody Energy Corp and Deutsche Small Cap 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.| Deutsche Small vs. Deutsche Gnma Fund | Deutsche Small vs. Deutsche Short Term Municipal | Deutsche Small vs. Deutsche Short Term Municipal | Deutsche Small vs. Deutsche Science And |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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