Correlation Between Deutsche Bank and Spotify Technology
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Spotify Technology 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 Spotify Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Bank Aktiengesellschaft and Spotify Technology SA, you can compare the effects of market volatilities on Deutsche Bank and Spotify Technology 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 Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Spotify Technology.
Diversification Opportunities for Deutsche Bank and Spotify Technology
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deutsche and Spotify is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology 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 Aktiengesellschaft are associated (or correlated) with Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Spotify Technology go up and down completely randomly.
Pair Corralation between Deutsche Bank and Spotify Technology
Assuming the 90 days trading horizon Deutsche Bank is expected to generate 3.75 times less return on investment than Spotify Technology. But when comparing it to its historical volatility, Deutsche Bank Aktiengesellschaft is 1.51 times less risky than Spotify Technology. It trades about 0.07 of its potential returns per unit of risk. Spotify Technology SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 41,070 in Spotify Technology SA on September 1, 2024 and sell it today you would earn a total of 30,689 from holding Spotify Technology SA or generate 74.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Bank Aktiengesellscha vs. Spotify Technology SA
Performance |
| Timeline |
| Deutsche Bank Aktien |
| Spotify Technology |
Deutsche Bank and Spotify Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Spotify Technology
The main advantage of trading using opposite Deutsche Bank and Spotify Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Spotify Technology 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 Spotify Technology will offset losses from the drop in Spotify Technology's long position.| Deutsche Bank vs. Paycom Software | Deutsche Bank vs. United States Steel | Deutsche Bank vs. Align Technology | Deutsche Bank vs. Charter Communications |
| Spotify Technology vs. New Oriental Education | Spotify Technology vs. Electronic Arts | Spotify Technology vs. Unifique Telecomunicaes SA | Spotify Technology vs. Multilaser Industrial SA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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