Correlation Between SYSTEMAIR and Deutsche Bank
Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR 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 SYSTEMAIR and Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYSTEMAIR AB and Deutsche Bank Aktiengesellschaft, you can compare the effects of market volatilities on SYSTEMAIR 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 SYSTEMAIR with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and Deutsche Bank.
Diversification Opportunities for SYSTEMAIR and Deutsche Bank
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SYSTEMAIR and Deutsche is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB 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 SYSTEMAIR 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 SYSTEMAIR AB 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 SYSTEMAIR i.e., SYSTEMAIR and Deutsche Bank go up and down completely randomly.
Pair Corralation between SYSTEMAIR and Deutsche Bank
Assuming the 90 days trading horizon SYSTEMAIR AB is expected to under-perform the Deutsche Bank. In addition to that, SYSTEMAIR is 3.07 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about -0.02 of its total potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.03 per unit of volatility. If you would invest 1,673 in Deutsche Bank Aktiengesellschaft on October 4, 2024 and sell it today you would earn a total of 8.00 from holding Deutsche Bank Aktiengesellschaft or generate 0.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 94.74% |
Values | Daily Returns |
SYSTEMAIR AB vs. Deutsche Bank Aktiengesellscha
Performance |
Timeline |
SYSTEMAIR AB |
Deutsche Bank Aktien |
SYSTEMAIR and Deutsche Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SYSTEMAIR and Deutsche Bank
The main advantage of trading using opposite SYSTEMAIR and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR 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.The idea behind SYSTEMAIR AB and Deutsche Bank Aktiengesellschaft 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.Deutsche Bank vs. Broadwind | Deutsche Bank vs. Transport International Holdings | Deutsche Bank vs. Texas Roadhouse | Deutsche Bank vs. EVS Broadcast Equipment |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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