Correlation Between Deutsche Bank and Credit Agricole

Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Credit Agricole 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 Credit Agricole 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 Credit Agricole SA, you can compare the effects of market volatilities on Deutsche Bank and Credit Agricole 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 Credit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Credit Agricole.

Diversification Opportunities for Deutsche Bank and Credit Agricole

0.98

Correlation Coefficient

Deutsche Bank  Credit Agricole

Almost no diversification

The 3 months correlation between Deutsche and Credit is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Credit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Agricole SA 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 Credit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Agricole SA has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Credit Agricole go up and down completely randomly.

Pair Corralation between Deutsche Bank and Credit Agricole

Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 2.06 times more return on investment than Credit Agricole. However, Deutsche Bank is 2.06 times more volatile than Credit Agricole SA. It trades about 0.26 of its potential returns per unit of risk. Credit Agricole SA is currently generating about 0.44 per unit of risk. If you would invest  1,722  in Deutsche Bank AG on December 26, 2024 and sell it today you would earn a total of  803.00  from holding Deutsche Bank AG or generate 46.63% return on investment over 90 days.

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

Deutsche Bank AG  vs.  Credit Agricole SA

Deutsche Bank AG

Risk-Adjusted Performance

Solid

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

Credit Agricole SA

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Agricole SA are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Credit Agricole showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Bank and Credit Agricole

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

The idea behind Deutsche Bank AG and Credit Agricole SA 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.