Correlation Between Spotify Technology and Deutsche Bank
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Deutsche Bank Aktiengesellschaft, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Deutsche Bank.
Diversification Opportunities for Spotify Technology and Deutsche Bank
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spotify and Deutsche is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA 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 Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and Deutsche Bank go up and down completely randomly.
Pair Corralation between Spotify Technology and Deutsche Bank
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.51 times more return on investment than Deutsche Bank. However, Spotify Technology is 1.51 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about 0.17 of its potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.07 per unit of risk. If you would invest 41,070 in Spotify Technology SA on September 1, 2024 and sell it today you would earn a total of 30,689 from holding Spotify Technology SA or generate 74.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spotify Technology SA vs. Deutsche Bank Aktiengesellscha
Performance |
| Timeline |
| Spotify Technology |
| Deutsche Bank Aktien |
Spotify Technology and Deutsche Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Deutsche Bank
The main advantage of trading using opposite Spotify Technology and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.| Spotify Technology vs. New Oriental Education | Spotify Technology vs. Electronic Arts | Spotify Technology vs. Unifique Telecomunicaes SA | Spotify Technology vs. Multilaser Industrial SA |
| Deutsche Bank vs. Paycom Software | Deutsche Bank vs. United States Steel | Deutsche Bank vs. Align Technology | Deutsche Bank vs. Charter Communications |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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