Correlation Between Deutsche Bank and Exxon
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Exxon 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 Exxon 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 Exxon Mobil, you can compare the effects of market volatilities on Deutsche Bank and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Exxon.
Diversification Opportunities for Deutsche Bank and Exxon
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Exxon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Exxon go up and down completely randomly.
Pair Corralation between Deutsche Bank and Exxon
Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 1.82 times more return on investment than Exxon. However, Deutsche Bank is 1.82 times more volatile than Exxon Mobil. It trades about 0.07 of its potential returns per unit of risk. Exxon Mobil is currently generating about 0.03 per unit of risk. If you would invest 19,849 in Deutsche Bank Aktiengesellschaft on September 3, 2024 and sell it today you would earn a total of 14,355 from holding Deutsche Bank Aktiengesellschaft or generate 72.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.79% |
| Values | Daily Returns |
Deutsche Bank Aktiengesellscha vs. Exxon Mobil
Performance |
| Timeline |
| Deutsche Bank Aktien |
| Exxon Mobil |
Deutsche Bank and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Exxon
The main advantage of trading using opposite Deutsche Bank and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon'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 |
| Exxon vs. GMxico Transportes SAB | Exxon vs. Deutsche Bank Aktiengesellschaft | Exxon vs. Grupo Hotelero Santa | Exxon vs. Hoteles City Express |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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