Correlation Between Deutsche Bank and Argo Blockchain

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

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

Diversification Opportunities for Deutsche Bank and Argo Blockchain

-0.51

Correlation Coefficient

Deutsche Bank  Argo Blockchain

Excellent diversification

The 3 months correlation between Deutsche and Argo is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Argo Blockchain PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Blockchain PLC and Deutsche Bank 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 Deutsche Bank AG are associated (or correlated) with Argo Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Blockchain PLC has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Argo Blockchain go up and down completely randomly.

Pair Corralation between Deutsche Bank and Argo Blockchain

Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 2.75 times less return on investment than Argo Blockchain. But when comparing it to its historical volatility, Deutsche Bank AG is 4.32 times less risky than Argo Blockchain. It trades about 0.06 of its potential returns per unit of risk. Argo Blockchain PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  73.00  in Argo Blockchain PLC on September 18, 2024 and sell it today you would lose (1.65) from holding Argo Blockchain PLC or give up 2.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Deutsche Bank AG  vs.  Argo Blockchain PLC

Deutsche Bank AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Deutsche Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Argo Blockchain PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argo Blockchain PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Deutsche Bank and Argo Blockchain

The main advantage of trading using opposite Deutsche Bank and Argo Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Argo Blockchain 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 Argo Blockchain will offset losses from the drop in Argo Blockchain's long position.

The idea behind Deutsche Bank AG and Argo Blockchain PLC 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.