Correlation Between Deutsche Bank and Foreign Trade
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Foreign Trade 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 Deutsche Bank and Foreign Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Bank AG and Foreign Trade Bank, you can compare the effects of market volatilities on Deutsche Bank and Foreign Trade 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 Deutsche Bank with a short position of Foreign Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Foreign Trade.
Diversification Opportunities for Deutsche Bank and Foreign Trade
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deutsche and Foreign is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Foreign Trade Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Trade Bank and Deutsche Bank 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 Deutsche Bank AG are associated (or correlated) with Foreign Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Trade Bank has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Foreign Trade go up and down completely randomly.
Pair Corralation between Deutsche Bank and Foreign Trade
Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 2.14 times less return on investment than Foreign Trade. In addition to that, Deutsche Bank is 1.17 times more volatile than Foreign Trade Bank. It trades about 0.05 of its total potential returns per unit of risk. Foreign Trade Bank is currently generating about 0.12 per unit of volatility. If you would invest 1,432 in Foreign Trade Bank on August 28, 2024 and sell it today you would earn a total of 1,966 from holding Foreign Trade Bank or generate 137.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Bank AG vs. Foreign Trade Bank
Performance |
| Timeline |
| Deutsche Bank AG |
| Foreign Trade Bank |
Deutsche Bank and Foreign Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Foreign Trade
The main advantage of trading using opposite Deutsche Bank and Foreign Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Foreign Trade 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 Foreign Trade will offset losses from the drop in Foreign Trade's long position.| Deutsche Bank vs. Banco Bradesco SA | Deutsche Bank vs. Itau Unibanco Banco | Deutsche Bank vs. Banco Santander Brasil | Deutsche Bank vs. Western Alliance Bancorporation |
| Foreign Trade vs. Banco Santander Chile | Foreign Trade vs. Bancolombia SA ADR | Foreign Trade vs. Banco Bradesco SA | Foreign Trade vs. Credicorp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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