Correlation Between Deutsche Bank and United Rentals
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and United Rentals 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 United Rentals 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 United Rentals, you can compare the effects of market volatilities on Deutsche Bank and United Rentals 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 United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and United Rentals.
Diversification Opportunities for Deutsche Bank and United Rentals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deutsche and United is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 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 United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and United Rentals go up and down completely randomly.
Pair Corralation between Deutsche Bank and United Rentals
Assuming the 90 days trading horizon Deutsche Bank is expected to generate 4.58 times less return on investment than United Rentals. But when comparing it to its historical volatility, Deutsche Bank Aktiengesellschaft is 3.47 times less risky than United Rentals. It trades about 0.07 of its potential returns per unit of risk. United Rentals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 15,536 in United Rentals on October 20, 2024 and sell it today you would earn a total of 1,200 from holding United Rentals or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Bank Aktiengesellscha vs. United Rentals
Performance |
| Timeline |
| Deutsche Bank Aktien |
| United Rentals |
Deutsche Bank and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and United Rentals
The main advantage of trading using opposite Deutsche Bank and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.| Deutsche Bank vs. Marvell Technology | Deutsche Bank vs. Unity Software | Deutsche Bank vs. Agilent Technologies | Deutsche Bank vs. Academy Sports and |
| United Rentals vs. NXP Semiconductors NV | United Rentals vs. Sumitomo Mitsui Financial | United Rentals vs. Alaska Air Group, | United Rentals vs. Broadridge Financial Solutions, |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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