Correlation Between Lifestyle and Dws Government

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

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

Diversification Opportunities for Lifestyle and Dws Government

-0.2

Correlation Coefficient

Lifestyle  Dws Government

Good diversification

The 3 months correlation between Lifestyle and Dws is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Aggressive and Dws Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dws Government Money and Lifestyle 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 Lifestyle Ii Aggressive are associated (or correlated) with Dws Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dws Government Money has no effect on the direction of Lifestyle i.e., Lifestyle and Dws Government go up and down completely randomly.

Pair Corralation between Lifestyle and Dws Government

Assuming the 90 days horizon Lifestyle Ii Aggressive is expected to generate 0.03 times more return on investment than Dws Government. However, Lifestyle Ii Aggressive is 28.84 times less risky than Dws Government. It trades about -0.3 of its potential returns per unit of risk. Dws Government Money is currently generating about -0.23 per unit of risk. If you would invest  1,268  in Lifestyle Ii Aggressive on January 20, 2024 and sell it today you would lose (53.00) from holding Lifestyle Ii Aggressive or give up 4.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.36%
Values	Daily Returns

Lifestyle Ii Aggressive  vs.  Dws Government Money

Lifestyle Ii Aggressive

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lifestyle Ii Aggressive are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 inconsistent 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.

Pair Trading with Lifestyle and Dws Government

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

The idea behind Lifestyle Ii Aggressive and Dws Government Money 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.