Correlation Between Deutsche Bank and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Tekla Healthcare 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 Tekla Healthcare 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 Tekla Healthcare Investors, you can compare the effects of market volatilities on Deutsche Bank and Tekla Healthcare 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 Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Tekla Healthcare.
Diversification Opportunities for Deutsche Bank and Tekla Healthcare
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Deutsche and Tekla is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Tekla Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Inv 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 Tekla Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Healthcare Inv has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Tekla Healthcare go up and down completely randomly.
Pair Corralation between Deutsche Bank and Tekla Healthcare
Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 1.35 times more return on investment than Tekla Healthcare. However, Deutsche Bank is 1.35 times more volatile than Tekla Healthcare Investors. It trades about -0.09 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.16 per unit of risk. If you would invest 1,713 in Deutsche Bank AG on August 28, 2024 and sell it today you would lose (65.00) from holding Deutsche Bank AG or give up 3.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Bank AG vs. Tekla Healthcare Investors
Performance |
| Timeline |
| Deutsche Bank AG |
| Tekla Healthcare Inv |
Deutsche Bank and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Tekla Healthcare
The main advantage of trading using opposite Deutsche Bank and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Tekla Healthcare 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 Tekla Healthcare will offset losses from the drop in Tekla Healthcare'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 |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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