Correlation Between Deutsche Bank and Investar Holding

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

Diversification Opportunities for Deutsche Bank and Investar Holding

-0.46

Correlation Coefficient

Deutsche Bank  Investar Holding

Very good diversification

The 3 months correlation between Deutsche and Investar is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp 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 Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Investar Holding go up and down completely randomly.

Pair Corralation between Deutsche Bank and Investar Holding

Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 0.84 times more return on investment than Investar Holding. However, Deutsche Bank AG is 1.2 times less risky than Investar Holding. It trades about 0.07 of its potential returns per unit of risk. Investar Holding Corp is currently generating about 0.01 per unit of risk. If you would invest  1,151  in Deutsche Bank AG on October 26, 2024 and sell it today you would earn a total of  849.00  from holding Deutsche Bank AG or generate 73.76% return on investment over 90 days.

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

Deutsche Bank AG  vs.  Investar Holding Corp

Deutsche Bank AG

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 12 (%) 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.

Investar Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investar Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Deutsche Bank and Investar Holding

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

The idea behind Deutsche Bank AG and Investar Holding Corp 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.