Correlation Between Mastercard Incorporated and Deutsche Bank
Can any of the company-specific risk be diversified away by investing in both Mastercard Incorporated and Deutsche Bank 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 Mastercard Incorporated and Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard Incorporated and Deutsche Bank Aktiengesellschaft, you can compare the effects of market volatilities on Mastercard Incorporated and Deutsche Bank 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 Mastercard Incorporated with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard Incorporated and Deutsche Bank.
Diversification Opportunities for Mastercard Incorporated and Deutsche Bank
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mastercard and Deutsche is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard Incorporated and Deutsche Bank Aktiengesellscha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank Aktien and Mastercard Incorporated 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 Mastercard Incorporated are associated (or correlated) with Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank Aktien has no effect on the direction of Mastercard Incorporated i.e., Mastercard Incorporated and Deutsche Bank go up and down completely randomly.
Pair Corralation between Mastercard Incorporated and Deutsche Bank
Assuming the 90 days horizon Mastercard Incorporated is expected to generate 1.07 times more return on investment than Deutsche Bank. However, Mastercard Incorporated is 1.07 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about 0.13 of its potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.03 per unit of risk. If you would invest 1,017,800 in Mastercard Incorporated on September 2, 2024 and sell it today you would earn a total of 47,200 from holding Mastercard Incorporated or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Mastercard Incorporated vs. Deutsche Bank Aktiengesellscha
Performance |
| Timeline |
| Mastercard Incorporated |
| Deutsche Bank Aktien |
Mastercard Incorporated and Deutsche Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard Incorporated and Deutsche Bank
The main advantage of trading using opposite Mastercard Incorporated and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard Incorporated position performs unexpectedly, Deutsche Bank 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 Deutsche Bank will offset losses from the drop in Deutsche Bank's long position.| Mastercard Incorporated vs. Visa Inc | Mastercard Incorporated vs. American Express | Mastercard Incorporated vs. Capital One Financial | Mastercard Incorporated vs. The Western Union |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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