Correlation Between Deutsche Bank and West Shore

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

Diversification Opportunities for Deutsche Bank and West Shore

0.11

Correlation Coefficient

Deutsche Bank  West Shore

Average diversification

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

Pair Corralation between Deutsche Bank and West Shore

Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to under-perform the West Shore. But the stock apears to be less risky and, when comparing its historical volatility, Deutsche Bank AG is 1.25 times less risky than West Shore. The stock trades about -0.07 of its potential returns per unit of risk. The West Shore Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,450  in West Shore Bank on October 10, 2024 and sell it today you would earn a total of  60.00  from holding West Shore Bank or generate 2.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Deutsche Bank AG  vs.  West Shore Bank

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.

West Shore Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in West Shore Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, West Shore is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Deutsche Bank and West Shore

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

The idea behind Deutsche Bank AG and West Shore Bank 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.