Correlation Between Deutsche Bank and Tesla

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Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Tesla 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 Tesla 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 Tesla Inc, you can compare the effects of market volatilities on Deutsche Bank and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Tesla.

Diversification Opportunities for Deutsche Bank and Tesla

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Deutsche and Tesla is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Tesla go up and down completely randomly.

Pair Corralation between Deutsche Bank and Tesla

Assuming the 90 days trading horizon Deutsche Bank is expected to generate 40.45 times less return on investment than Tesla. But when comparing it to its historical volatility, Deutsche Bank Aktiengesellschaft is 3.13 times less risky than Tesla. It trades about 0.03 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  488,587  in Tesla Inc on September 3, 2024 and sell it today you would earn a total of  211,413  from holding Tesla Inc or generate 43.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy85.0%
ValuesDaily Returns

Deutsche Bank Aktiengesellscha  vs.  Tesla Inc

 Performance 
       Timeline  
Deutsche Bank Aktien 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Deutsche Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Tesla Inc 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Tesla showed solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Bank and Tesla Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deutsche Bank and Tesla

The main advantage of trading using opposite Deutsche Bank and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.
The idea behind Deutsche Bank Aktiengesellschaft and Tesla Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Global Correlations module to find global opportunities by holding instruments from different markets.

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