Correlation Between Deutsche Bank and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Sumitomo Mitsui 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 Sumitomo Mitsui 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 Sumitomo Mitsui Trust, you can compare the effects of market volatilities on Deutsche Bank and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Sumitomo Mitsui.
Diversification Opportunities for Deutsche Bank and Sumitomo Mitsui
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Deutsche and Sumitomo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Sumitomo Mitsui Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Trust 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Trust has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Deutsche Bank and Sumitomo Mitsui
Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 0.36 times more return on investment than Sumitomo Mitsui. However, Deutsche Bank AG is 2.77 times less risky than Sumitomo Mitsui. It trades about 0.11 of its potential returns per unit of risk. Sumitomo Mitsui Trust is currently generating about 0.01 per unit of risk. If you would invest 1,648 in Deutsche Bank AG on September 26, 2024 and sell it today you would earn a total of 56.00 from holding Deutsche Bank AG or generate 3.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Deutsche Bank AG vs. Sumitomo Mitsui Trust
Performance |
Timeline |
Deutsche Bank AG |
Sumitomo Mitsui Trust |
Deutsche Bank and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Deutsche Bank and Sumitomo Mitsui
The main advantage of trading using opposite Deutsche Bank and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.Deutsche Bank vs. Banco Bradesco SA | Deutsche Bank vs. Itau Unibanco Banco | Deutsche Bank vs. Lloyds Banking Group | Deutsche Bank vs. Banco Santander Brasil |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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