Correlation Between Deutsche Bank and Home Depot
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Home Depot 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 Home Depot 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 The Home Depot, you can compare the effects of market volatilities on Deutsche Bank and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Home Depot.
Diversification Opportunities for Deutsche Bank and Home Depot
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Home is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Home Depot go up and down completely randomly.
Pair Corralation between Deutsche Bank and Home Depot
Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 1.63 times more return on investment than Home Depot. However, Deutsche Bank is 1.63 times more volatile than The Home Depot. It trades about 0.16 of its potential returns per unit of risk. The Home Depot is currently generating about 0.11 per unit of risk. If you would invest 18,680 in Deutsche Bank Aktiengesellschaft on September 3, 2024 and sell it today you would earn a total of 15,524 from holding Deutsche Bank Aktiengesellschaft or generate 83.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 55.19% |
| Values | Daily Returns |
Deutsche Bank Aktiengesellscha vs. The Home Depot
Performance |
| Timeline |
| Deutsche Bank Aktien |
| Home Depot |
Deutsche Bank and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Home Depot
The main advantage of trading using opposite Deutsche Bank and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Deutsche Bank vs. Lloyds Banking Group | Deutsche Bank vs. The Select Sector | Deutsche Bank vs. Promotora y Operadora | Deutsche Bank vs. SPDR Series Trust |
| Home Depot vs. The Select Sector | Home Depot vs. Promotora y Operadora | Home Depot vs. iShares Global Timber | Home Depot vs. SPDR Series Trust |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |