Correlation Between Deutsche Bank and Metal Sky

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

Diversification Opportunities for Deutsche Bank and Metal Sky

0.13

Correlation Coefficient

Deutsche Bank  Metal Sky

Average diversification

The 3 months correlation between Deutsche and Metal is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star 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 Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Metal Sky go up and down completely randomly.

Pair Corralation between Deutsche Bank and Metal Sky

Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 3.74 times more return on investment than Metal Sky. However, Deutsche Bank is 3.74 times more volatile than Metal Sky Star. It trades about 0.1 of its potential returns per unit of risk. Metal Sky Star is currently generating about 0.05 per unit of risk. If you would invest  1,049  in Deutsche Bank AG on September 19, 2024 and sell it today you would earn a total of  669.00  from holding Deutsche Bank AG or generate 63.78% return on investment over 90 days.

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

Deutsche Bank AG  vs.  Metal Sky Star

Deutsche Bank AG

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Metal Sky Star

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Metal Sky 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 Metal Sky

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

The idea behind Deutsche Bank AG and Metal Sky Star 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.