Correlation Between Sumitomo Mitsui and Deutsche Bank
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui 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 Sumitomo Mitsui and Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Financial and Deutsche Bank Aktiengesellschaft, you can compare the effects of market volatilities on Sumitomo Mitsui 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 Sumitomo Mitsui with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Deutsche Bank.
Diversification Opportunities for Sumitomo Mitsui and Deutsche Bank
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sumitomo and Deutsche is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial 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 Sumitomo Mitsui 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 Sumitomo Mitsui Financial 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 Sumitomo Mitsui i.e., Sumitomo Mitsui and Deutsche Bank go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Deutsche Bank
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 1.05 times more return on investment than Deutsche Bank. However, Sumitomo Mitsui is 1.05 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about 0.48 of its potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about -0.09 per unit of risk. If you would invest 7,021 in Sumitomo Mitsui Financial on August 25, 2024 and sell it today you would earn a total of 1,243 from holding Sumitomo Mitsui Financial or generate 17.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Deutsche Bank Aktiengesellscha
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Deutsche Bank Aktien |
Sumitomo Mitsui and Deutsche Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Deutsche Bank
The main advantage of trading using opposite Sumitomo Mitsui and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui 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.| Sumitomo Mitsui vs. Fras le SA | Sumitomo Mitsui vs. Clave Indices De | Sumitomo Mitsui vs. BTG Pactual Logstica | Sumitomo Mitsui vs. Telefonaktiebolaget LM Ericsson |
| Deutsche Bank vs. HDFC Bank Limited | Deutsche Bank vs. Fras le SA | Deutsche Bank vs. Clave Indices De | Deutsche Bank vs. BTG Pactual Logstica |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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