Correlation Between Deutsche Bank and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and NMI Holdings 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 NMI Holdings 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 NMI Holdings, you can compare the effects of market volatilities on Deutsche Bank and NMI Holdings 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 NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and NMI Holdings.
Diversification Opportunities for Deutsche Bank and NMI Holdings
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Deutsche and NMI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings 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 NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and NMI Holdings go up and down completely randomly.
Pair Corralation between Deutsche Bank and NMI Holdings
Assuming the 90 days horizon Deutsche Bank Aktiengesellschaft is expected to generate 1.2 times more return on investment than NMI Holdings. However, Deutsche Bank is 1.2 times more volatile than NMI Holdings. It trades about 0.1 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.08 per unit of risk. If you would invest 980.00 in Deutsche Bank Aktiengesellschaft on August 25, 2024 and sell it today you would earn a total of 615.00 from holding Deutsche Bank Aktiengesellschaft or generate 62.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Bank Aktiengesellscha vs. NMI Holdings
Performance |
| Timeline |
| Deutsche Bank Aktien |
| NMI Holdings |
Deutsche Bank and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and NMI Holdings
The main advantage of trading using opposite Deutsche Bank and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| Deutsche Bank vs. Postal Savings Bank | Deutsche Bank vs. Superior Plus Corp | Deutsche Bank vs. NMI Holdings | Deutsche Bank vs. Origin Agritech |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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