Correlation Between Dws Government and Low-duration Bond

Can any of the company-specific risk be diversified away by investing in both Dws Government and Low-duration Bond 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 Dws Government and Low-duration Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dws Government Money and Low Duration Bond Investor, you can compare the effects of market volatilities on Dws Government and Low-duration Bond 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 Dws Government with a short position of Low-duration Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dws Government and Low-duration Bond.

Diversification Opportunities for Dws Government and Low-duration Bond

-0.27

Correlation Coefficient

Dws Government  Low-duration Bond

Very good diversification

The 3 months correlation between Dws and Low-duration is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dws Government Money and Low Duration Bond Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Low Duration Bond and Dws Government 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 Dws Government Money are associated (or correlated) with Low-duration Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Low Duration Bond has no effect on the direction of Dws Government i.e., Dws Government and Low-duration Bond go up and down completely randomly.

Pair Corralation between Dws Government and Low-duration Bond

Assuming the 90 days horizon Dws Government Money is expected to under-perform the Low-duration Bond. In addition to that, Dws Government is 75.64 times more volatile than Low Duration Bond Investor. It trades about -0.13 of its total potential returns per unit of risk. Low Duration Bond Investor is currently generating about 0.03 per unit of volatility. If you would invest  1,270  in Low Duration Bond Investor on January 26, 2024 and sell it today you would earn a total of  3.00  from holding Low Duration Bond Investor or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Dws Government Money  vs.  Low Duration Bond Investor

Dws Government Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dws Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

Low Duration Bond

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Low Duration Bond Investor are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Low-duration Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dws Government and Low-duration Bond

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

The idea behind Dws Government Money and Low Duration Bond Investor 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.