Correlation Between Deutsche Bank and Merchants Marine

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

Diversification Opportunities for Deutsche Bank and Merchants Marine

-0.24

Correlation Coefficient

Deutsche Bank  Merchants Marine

Very good diversification

The 3 months correlation between Deutsche and Merchants is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Merchants Marine Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Marine Bancorp 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 Merchants Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Marine Bancorp has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Merchants Marine go up and down completely randomly.

Pair Corralation between Deutsche Bank and Merchants Marine

Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 1.01 times more return on investment than Merchants Marine. However, Deutsche Bank is 1.01 times more volatile than Merchants Marine Bancorp. It trades about 0.01 of its potential returns per unit of risk. Merchants Marine Bancorp is currently generating about 0.01 per unit of risk. If you would invest  1,690  in Deutsche Bank AG on September 22, 2024 and sell it today you would earn a total of  3.00  from holding Deutsche Bank AG or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Deutsche Bank AG  vs.  Merchants Marine Bancorp

Deutsche Bank AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Bank AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Deutsche Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Merchants Marine Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merchants Marine Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Merchants Marine is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Deutsche Bank and Merchants Marine

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

The idea behind Deutsche Bank AG and Merchants Marine Bancorp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.