Correlation Between Deutsche Bank and Capital One
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Capital One 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 Capital One 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 Capital One Financial, you can compare the effects of market volatilities on Deutsche Bank and Capital One 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 Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Capital One.
Diversification Opportunities for Deutsche Bank and Capital One
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Deutsche and Capital is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial 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 Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Capital One go up and down completely randomly.
Pair Corralation between Deutsche Bank and Capital One
Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 1.18 times more return on investment than Capital One. However, Deutsche Bank is 1.18 times more volatile than Capital One Financial. It trades about 0.3 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.15 per unit of risk. If you would invest 35,804 in Deutsche Bank Aktiengesellschaft on October 20, 2024 and sell it today you would earn a total of 3,696 from holding Deutsche Bank Aktiengesellschaft or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Deutsche Bank Aktiengesellscha vs. Capital One Financial
Performance |
| Timeline |
| Deutsche Bank Aktien |
| Capital One Financial |
Deutsche Bank and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Capital One
The main advantage of trading using opposite Deutsche Bank and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| Deutsche Bank vs. KB Home | Deutsche Bank vs. FibraHotel | Deutsche Bank vs. Micron Technology | Deutsche Bank vs. GMxico Transportes SAB |
| Capital One vs. McEwen Mining | Capital One vs. DXC Technology | Capital One vs. Grupo Hotelero Santa | Capital One vs. First Republic Bank |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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