Correlation Between PSB Holdings and Commerzbank
Can any of the company-specific risk be diversified away by investing in both PSB Holdings and Commerzbank 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 PSB Holdings and Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PSB Holdings and Commerzbank AG, you can compare the effects of market volatilities on PSB Holdings and Commerzbank 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 PSB Holdings with a short position of Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSB Holdings and Commerzbank.
Diversification Opportunities for PSB Holdings and Commerzbank
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PSB and Commerzbank is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG and PSB Holdings 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 PSB Holdings are associated (or correlated) with Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of PSB Holdings i.e., PSB Holdings and Commerzbank go up and down completely randomly.
Pair Corralation between PSB Holdings and Commerzbank
Given the investment horizon of 90 days PSB Holdings is expected to generate 2.86 times less return on investment than Commerzbank. But when comparing it to its historical volatility, PSB Holdings is 2.49 times less risky than Commerzbank. It trades about 0.11 of its potential returns per unit of risk. Commerzbank AG is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 994.00 in Commerzbank AG on August 29, 2024 and sell it today you would earn a total of 806.00 from holding Commerzbank AG or generate 81.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.37% |
| Values | Daily Returns |
PSB Holdings vs. Commerzbank AG
Performance |
| Timeline |
| PSB Holdings |
| Commerzbank AG |
PSB Holdings and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PSB Holdings and Commerzbank
The main advantage of trading using opposite PSB Holdings and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSB Holdings position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| PSB Holdings vs. Eagle Financial Services | PSB Holdings vs. National Capital Bank | PSB Holdings vs. Community Heritage Financial | PSB Holdings vs. Citizens Financial Corp |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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