Correlation Between Deutsche Bank and Magna International
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Magna International 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 Magna International 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 Magna International, you can compare the effects of market volatilities on Deutsche Bank and Magna International 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 Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Magna International.
Diversification Opportunities for Deutsche Bank and Magna International
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Magna is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International 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 Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Magna International go up and down completely randomly.
Pair Corralation between Deutsche Bank and Magna International
Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 1.52 times more return on investment than Magna International. However, Deutsche Bank is 1.52 times more volatile than Magna International. It trades about 0.13 of its potential returns per unit of risk. Magna International is currently generating about -0.01 per unit of risk. If you would invest 21,856 in Deutsche Bank Aktiengesellschaft on September 4, 2024 and sell it today you would earn a total of 12,348 from holding Deutsche Bank Aktiengesellschaft or generate 56.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.12% |
| Values | Daily Returns |
Deutsche Bank Aktiengesellscha vs. Magna International
Performance |
| Timeline |
| Deutsche Bank Aktien |
| Magna International |
Deutsche Bank and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Magna International
The main advantage of trading using opposite Deutsche Bank and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International's long position.| Deutsche Bank vs. Applied Materials | Deutsche Bank vs. Monster Beverage Corp | Deutsche Bank vs. McEwen Mining | Deutsche Bank vs. Southwest Airlines |
| Magna International vs. Grupo Hotelero Santa | Magna International vs. GMxico Transportes SAB | Magna International vs. Micron Technology | Magna International vs. Southern Copper |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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