Correlation Between Check Point and Deutsche Bank

Can any of the company-specific risk be diversified away by investing in both Check Point 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 Check Point and Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Check Point Software and Deutsche Bank Aktiengesellschaft, you can compare the effects of market volatilities on Check Point 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 Check Point with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Deutsche Bank.

Diversification Opportunities for Check Point and Deutsche Bank

0.65

Correlation Coefficient

Check Point  Deutsche Bank

Poor diversification

The 3 months correlation between Check and Deutsche is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software 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 Check Point 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 Check Point Software 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 Check Point i.e., Check Point and Deutsche Bank go up and down completely randomly.

Pair Corralation between Check Point and Deutsche Bank

Assuming the 90 days trading horizon Check Point is expected to generate 3.06 times less return on investment than Deutsche Bank. But when comparing it to its historical volatility, Check Point Software is 2.18 times less risky than Deutsche Bank. It trades about 0.18 of its potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  10,470  in Deutsche Bank Aktiengesellschaft on December 25, 2024 and sell it today you would earn a total of  3,760  from holding Deutsche Bank Aktiengesellschaft or generate 35.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Check Point Software  vs.  Deutsche Bank Aktiengesellscha

Check Point Software

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Check Point may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Deutsche Bank Aktien

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Deutsche Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Check Point and Deutsche Bank

The main advantage of trading using opposite Check Point and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point 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 Check Point Software 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.