Correlation Between Deutsche Bank and BASF SE
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and BASF SE 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 BASF SE 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 BASF SE, you can compare the effects of market volatilities on Deutsche Bank and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and BASF SE.
Diversification Opportunities for Deutsche Bank and BASF SE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Deutsche and BASF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and BASF SE go up and down completely randomly.
Pair Corralation between Deutsche Bank and BASF SE
Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 3.92 times more return on investment than BASF SE. However, Deutsche Bank is 3.92 times more volatile than BASF SE. It trades about 0.15 of its potential returns per unit of risk. BASF SE is currently generating about 0.02 per unit of risk. If you would invest 18,150 in Deutsche Bank Aktiengesellschaft on September 2, 2024 and sell it today you would earn a total of 16,054 from holding Deutsche Bank Aktiengesellschaft or generate 88.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 53.23% |
| Values | Daily Returns |
Deutsche Bank Aktiengesellscha vs. BASF SE
Performance |
| Timeline |
| Deutsche Bank Aktien |
| BASF SE |
Deutsche Bank and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and BASF SE
The main advantage of trading using opposite Deutsche Bank and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| Deutsche Bank vs. Lloyds Banking Group | Deutsche Bank vs. Netflix | Deutsche Bank vs. Monster Beverage Corp |
| BASF SE vs. Costco Wholesale | BASF SE vs. United States Steel | BASF SE vs. GMxico Transportes SAB | BASF SE vs. Genworth Financial |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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