Correlation Between Nasdaq 100 and Deutsche Real

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Deutsche Real 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 Nasdaq 100 and Deutsche Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 Index Fund and Deutsche Real Estate, you can compare the effects of market volatilities on Nasdaq 100 and Deutsche Real 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 Nasdaq 100 with a short position of Deutsche Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Deutsche Real.

Diversification Opportunities for Nasdaq 100 and Deutsche Real

-0.28

Correlation Coefficient

Nasdaq 100  Deutsche Real

Very good diversification

The 3 months correlation between Nasdaq and Deutsche is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Deutsche Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Real Estate and Nasdaq 100 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 Nasdaq 100 Index Fund are associated (or correlated) with Deutsche Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Real Estate has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Deutsche Real go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Deutsche Real

Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 0.94 times more return on investment than Deutsche Real. However, Nasdaq 100 Index Fund is 1.06 times less risky than Deutsche Real. It trades about 0.1 of its potential returns per unit of risk. Deutsche Real Estate is currently generating about -0.33 per unit of risk. If you would invest  5,230  in Nasdaq 100 Index Fund on September 26, 2024 and sell it today you would earn a total of  134.00  from holding Nasdaq 100 Index Fund or generate 2.56% return on investment over 90 days.

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

Nasdaq 100 Index Fund  vs.  Deutsche Real Estate

Nasdaq 100 Index

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Index Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nasdaq 100 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Deutsche Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Nasdaq 100 and Deutsche Real

The main advantage of trading using opposite Nasdaq 100 and Deutsche Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Deutsche Real 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 Real will offset losses from the drop in Deutsche Real's long position.

The idea behind Nasdaq 100 Index Fund and Deutsche Real Estate 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.