Correlation Between Deutsche Bank and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on Deutsche Bank and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Micron Technology.
Diversification Opportunities for Deutsche Bank and Micron Technology
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Micron is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Micron Technology go up and down completely randomly.
Pair Corralation between Deutsche Bank and Micron Technology
Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to under-perform the Micron Technology. But the stock apears to be less risky and, when comparing its historical volatility, Deutsche Bank Aktiengesellschaft is 1.88 times less risky than Micron Technology. The stock trades about -0.09 of its potential returns per unit of risk. The Micron Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 213,337 in Micron Technology on August 28, 2024 and sell it today you would lose (145.00) from holding Micron Technology or give up 0.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Bank Aktiengesellscha vs. Micron Technology
Performance |
| Timeline |
| Deutsche Bank Aktien |
| Micron Technology |
Deutsche Bank and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Micron Technology
The main advantage of trading using opposite Deutsche Bank and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Deutsche Bank vs. Prudential Financial | Deutsche Bank vs. Cognizant Technology Solutions | Deutsche Bank vs. GMxico Transportes SAB | Deutsche Bank vs. Genworth Financial |
| Micron Technology vs. The Bank of | Micron Technology vs. Burlington Stores | Micron Technology vs. Grupo Carso SAB | Micron Technology vs. United States Steel |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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