Correlation Between Deutsche Bank and CIT Group
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and CIT Group 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 CIT Group 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 CIT Group Preferred, you can compare the effects of market volatilities on Deutsche Bank and CIT Group 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 CIT Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and CIT Group.
Diversification Opportunities for Deutsche Bank and CIT Group
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deutsche and CIT is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and CIT Group Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIT Group Preferred 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 CIT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIT Group Preferred has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and CIT Group go up and down completely randomly.
Pair Corralation between Deutsche Bank and CIT Group
Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 2.71 times more return on investment than CIT Group. However, Deutsche Bank is 2.71 times more volatile than CIT Group Preferred. It trades about 0.06 of its potential returns per unit of risk. CIT Group Preferred is currently generating about 0.08 per unit of risk. If you would invest 1,361 in Deutsche Bank AG on September 3, 2024 and sell it today you would earn a total of 340.00 from holding Deutsche Bank AG or generate 24.98% 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. CIT Group Preferred
Performance |
| Timeline |
| Deutsche Bank AG |
| CIT Group Preferred |
Deutsche Bank and CIT Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and CIT Group
The main advantage of trading using opposite Deutsche Bank and CIT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, CIT Group 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 CIT Group will offset losses from the drop in CIT Group's long position.| Deutsche Bank vs. Banco Bradesco SA | Deutsche Bank vs. Itau Unibanco Banco | Deutsche Bank vs. Lloyds Banking Group | Deutsche Bank vs. Banco Santander Brasil |
| CIT Group vs. First Citizens BancShares | CIT Group vs. Texas Capital Bancshares | CIT Group vs. Dime Community Bancshares | CIT Group vs. Fifth Third Bancorp |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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