Correlation Between Xiaomi and Deutsche Bank
Can any of the company-specific risk be diversified away by investing in both Xiaomi and Deutsche Bank 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 Xiaomi and Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xiaomi and Deutsche Bank Aktiengesellschaft, you can compare the effects of market volatilities on Xiaomi and Deutsche Bank 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 Xiaomi with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiaomi and Deutsche Bank.
Diversification Opportunities for Xiaomi and Deutsche Bank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xiaomi and Deutsche is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Xiaomi and Deutsche Bank Aktiengesellscha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank Aktien and Xiaomi 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 Xiaomi are associated (or correlated) with Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank Aktien has no effect on the direction of Xiaomi i.e., Xiaomi and Deutsche Bank go up and down completely randomly.
Pair Corralation between Xiaomi and Deutsche Bank
Assuming the 90 days trading horizon Xiaomi is expected to under-perform the Deutsche Bank. In addition to that, Xiaomi is 2.2 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about -0.02 of its total potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.24 per unit of volatility. If you would invest 33,500 in Deutsche Bank Aktiengesellschaft on September 12, 2024 and sell it today you would earn a total of 2,304 from holding Deutsche Bank Aktiengesellschaft or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Xiaomi vs. Deutsche Bank Aktiengesellscha
Performance |
| Timeline |
| Xiaomi |
| Deutsche Bank Aktien |
Xiaomi and Deutsche Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiaomi and Deutsche Bank
The main advantage of trading using opposite Xiaomi and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiaomi position performs unexpectedly, Deutsche Bank 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 Bank will offset losses from the drop in Deutsche Bank's long position.| Xiaomi vs. Prudential Financial | Xiaomi vs. First Republic Bank | Xiaomi vs. Hoteles City Express | Xiaomi vs. McEwen Mining |
| Deutsche Bank vs. Lloyds Banking Group | Deutsche Bank vs. The Select Sector | Deutsche Bank vs. Promotora y Operadora | Deutsche Bank vs. iShares Global Timber |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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