Correlation Between Deutsche Bank and Rand Capital

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

Diversification Opportunities for Deutsche Bank and Rand Capital

0.84

Correlation Coefficient

Deutsche Bank  Rand Capital

Very poor diversification

The 3 months correlation between Deutsche and Rand is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Rand Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Capital 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 Rand Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Capital Corp has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Rand Capital go up and down completely randomly.

Pair Corralation between Deutsche Bank and Rand Capital

Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 1.44 times less return on investment than Rand Capital. But when comparing it to its historical volatility, Deutsche Bank AG is 1.42 times less risky than Rand Capital. It trades about 0.09 of its potential returns per unit of risk. Rand Capital Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  977.00  in Rand Capital Corp on December 5, 2024 and sell it today you would earn a total of  1,303  from holding Rand Capital Corp or generate 133.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	76.88%
Values	Daily Returns

Deutsche Bank AG  vs.  Rand Capital Corp

Deutsche Bank AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 15 (%) 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.

Rand Capital Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Bank and Rand Capital

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

The idea behind Deutsche Bank AG and Rand Capital 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.