Correlation Between Deutsche Bank and Pioneer Bankcorp

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

Diversification Opportunities for Deutsche Bank and Pioneer Bankcorp

0.11

Correlation Coefficient

Deutsche Bank  Pioneer Bankcorp

Average diversification

The 3 months correlation between Deutsche and Pioneer is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Pioneer Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Bankcorp 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 Pioneer Bankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Bankcorp has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Pioneer Bankcorp go up and down completely randomly.

Pair Corralation between Deutsche Bank and Pioneer Bankcorp

Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 1.82 times less return on investment than Pioneer Bankcorp. In addition to that, Deutsche Bank is 4.09 times more volatile than Pioneer Bankcorp. It trades about 0.03 of its total potential returns per unit of risk. Pioneer Bankcorp is currently generating about 0.21 per unit of volatility. If you would invest  4,700  in Pioneer Bankcorp on September 22, 2024 and sell it today you would earn a total of  100.00  from holding Pioneer Bankcorp or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Deutsche Bank AG  vs.  Pioneer Bankcorp

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.

Pioneer Bankcorp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Bankcorp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, Pioneer Bankcorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Deutsche Bank and Pioneer Bankcorp

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

The idea behind Deutsche Bank AG and Pioneer Bankcorp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.