Correlation Between Deutsche Bank and Heritage Commerce

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Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Heritage Commerce 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 Heritage Commerce 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 Heritage Commerce Corp, you can compare the effects of market volatilities on Deutsche Bank and Heritage Commerce 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 Heritage Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Heritage Commerce.

Diversification Opportunities for Deutsche Bank and Heritage Commerce

DeutscheHeritageDiversified AwayDeutscheHeritageDiversified Away100%
-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Deutsche and Heritage is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Heritage Commerce Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Commerce Corp 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 Heritage Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Commerce Corp has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Heritage Commerce go up and down completely randomly.

Pair Corralation between Deutsche Bank and Heritage Commerce

Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 5.08 times less return on investment than Heritage Commerce. In addition to that, Deutsche Bank is 1.05 times more volatile than Heritage Commerce Corp. It trades about 0.1 of its total potential returns per unit of risk. Heritage Commerce Corp is currently generating about 0.54 per unit of volatility. If you would invest  916.00  in Heritage Commerce Corp on November 21, 2024 and sell it today you would earn a total of  156.00  from holding Heritage Commerce Corp or generate 17.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Deutsche Bank AG  vs.  Heritage Commerce Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-1001020
JavaScript chart by amCharts 3.21.15DB HTBK
       Timeline  
Deutsche Bank AG 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Deutsche Bank sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1616.51717.51818.51919.52020.5
Heritage Commerce Corp 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Heritage Commerce Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Heritage Commerce is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb8.599.51010.511

Deutsche Bank and Heritage Commerce Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.21-3.9-2.59-1.280.01.412.844.275.7 0.050.100.150.20
JavaScript chart by amCharts 3.21.15DB HTBK
       Returns  

Pair Trading with Deutsche Bank and Heritage Commerce

The main advantage of trading using opposite Deutsche Bank and Heritage Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Heritage Commerce 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 Heritage Commerce will offset losses from the drop in Heritage Commerce's long position.
The idea behind Deutsche Bank AG and Heritage Commerce Corp 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.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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