Correlation Between Deutsche Bank and Distoken Acquisition

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

Diversification Opportunities for Deutsche Bank and Distoken Acquisition

-0.09

Correlation Coefficient

Deutsche Bank  Distoken Acquisition

Good diversification

The 3 months correlation between Deutsche and Distoken is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition 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 Distoken Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distoken Acquisition has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Distoken Acquisition go up and down completely randomly.

Pair Corralation between Deutsche Bank and Distoken Acquisition

Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 5.55 times less return on investment than Distoken Acquisition. But when comparing it to its historical volatility, Deutsche Bank AG is 6.66 times less risky than Distoken Acquisition. It trades about 0.24 of its potential returns per unit of risk. Distoken Acquisition is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1.77  in Distoken Acquisition on December 22, 2024 and sell it today you would earn a total of  1.16  from holding Distoken Acquisition or generate 65.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.34%
Values	Daily Returns

Deutsche Bank AG  vs.  Distoken Acquisition

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 18 (%) 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.

Distoken Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Distoken Acquisition are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Distoken Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Bank and Distoken Acquisition

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

The idea behind Deutsche Bank AG and Distoken Acquisition 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.