Correlation Between Deutsche Bank and Yirendai
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Yirendai 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 Yirendai 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 Yirendai, you can compare the effects of market volatilities on Deutsche Bank and Yirendai 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 Yirendai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Yirendai.
Diversification Opportunities for Deutsche Bank and Yirendai
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Yirendai is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Yirendai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yirendai 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 Yirendai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yirendai has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Yirendai go up and down completely randomly.
Pair Corralation between Deutsche Bank and Yirendai
Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 0.35 times more return on investment than Yirendai. However, Deutsche Bank AG is 2.87 times less risky than Yirendai. It trades about -0.09 of its potential returns per unit of risk. Yirendai is currently generating about -0.16 per unit of risk. If you would invest 1,713 in Deutsche Bank AG on August 27, 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Bank AG vs. Yirendai
Performance |
| Timeline |
| Deutsche Bank AG |
| Yirendai |
Deutsche Bank and Yirendai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Yirendai
The main advantage of trading using opposite Deutsche Bank and Yirendai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Yirendai 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 Yirendai will offset losses from the drop in Yirendai'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 |
| Yirendai vs. Lexinfintech Holdings | Yirendai vs. FinVolution Group | Yirendai vs. 360 Finance | Yirendai vs. Navient Corp |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |