Correlation Between Deutsche Bank and Citizens Financial

Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Citizens Financial 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 Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Deutsche Bank Aktiengesellschaft and Citizens Financial Group,, you can compare the effects of market volatilities on Deutsche Bank and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Citizens Financial.

Diversification Opportunities for Deutsche Bank and Citizens Financial

-0.78

Correlation Coefficient

Deutsche Bank  Citizens Financial

Pay attention - limited upside

The 3 months correlation between Deutsche and Citizens is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, 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 Aktiengesellschaft are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Group, has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Citizens Financial go up and down completely randomly.

Pair Corralation between Deutsche Bank and Citizens Financial

Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 1.49 times more return on investment than Citizens Financial. However, Deutsche Bank is 1.49 times more volatile than Citizens Financial Group,. It trades about 0.23 of its potential returns per unit of risk. Citizens Financial Group, is currently generating about -0.11 per unit of risk. If you would invest  10,659  in Deutsche Bank Aktiengesellschaft on December 27, 2024 and sell it today you would earn a total of  3,426  from holding Deutsche Bank Aktiengesellschaft or generate 32.14% return on investment over 90 days.

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

Deutsche Bank Aktiengesellscha  vs.  Citizens Financial Group,

Deutsche Bank Aktien

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Deutsche Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Citizens Financial Group,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Financial Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Deutsche Bank and Citizens Financial

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

The idea behind Deutsche Bank Aktiengesellschaft and Citizens Financial Group, 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.