Correlation Between Deutsche Bank and Valley National
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Valley National 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 Valley National 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 Valley National Bancorp, you can compare the effects of market volatilities on Deutsche Bank and Valley National 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 Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Valley National.
Diversification Opportunities for Deutsche Bank and Valley National
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Valley is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Valley National go up and down completely randomly.
Pair Corralation between Deutsche Bank and Valley National
Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to under-perform the Valley National. In addition to that, Deutsche Bank is 2.67 times more volatile than Valley National Bancorp. It trades about -0.09 of its total potential returns per unit of risk. Valley National Bancorp is currently generating about 0.03 per unit of volatility. If you would invest 2,520 in Valley National Bancorp on August 27, 2024 and sell it today you would earn a total of 10.00 from holding Valley National Bancorp or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Bank AG vs. Valley National Bancorp
Performance |
| Timeline |
| Deutsche Bank AG |
| Valley National Bancorp |
Deutsche Bank and Valley National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Valley National
The main advantage of trading using opposite Deutsche Bank and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Valley National 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 Valley National will offset losses from the drop in Valley National'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 |
| Valley National vs. Washington Federal | Valley National vs. US Bancorp PERP | Valley National vs. Merchants Marine Bancorp | Valley National vs. US 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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