Correlation Between Deutsche Post and Washington Business

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Can any of the company-specific risk be diversified away by investing in both Deutsche Post and Washington Business 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 Post and Washington Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Post AG and Washington Business Bank, you can compare the effects of market volatilities on Deutsche Post and Washington Business 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 Post with a short position of Washington Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and Washington Business.

Diversification Opportunities for Deutsche Post and Washington Business

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Deutsche and Washington is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and Washington Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Business Bank and Deutsche Post 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 Post AG are associated (or correlated) with Washington Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Business Bank has no effect on the direction of Deutsche Post i.e., Deutsche Post and Washington Business go up and down completely randomly.

Pair Corralation between Deutsche Post and Washington Business

If you would invest  3,629  in Deutsche Post AG on October 26, 2024 and sell it today you would earn a total of  105.00  from holding Deutsche Post AG or generate 2.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy15.38%
ValuesDaily Returns

Deutsche Post AG  vs.  Washington Business Bank

 Performance 
       Timeline  
Deutsche Post AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Deutsche Post AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Washington Business Bank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Solid
Over the last 90 days Washington Business Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat inconsistent basic indicators, Washington Business sustained solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Post and Washington Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deutsche Post and Washington Business

The main advantage of trading using opposite Deutsche Post and Washington Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Post position performs unexpectedly, Washington Business 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 Washington Business will offset losses from the drop in Washington Business' long position.
The idea behind Deutsche Post AG and Washington Business Bank 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.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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