Correlation Between Deutsche Bank and Danaher

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

Diversification Opportunities for Deutsche Bank and Danaher

-0.3

Correlation Coefficient

Deutsche Bank  Danaher

Very good diversification

The 3 months correlation between Deutsche and Danaher is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Danaher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaher 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 Danaher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaher has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Danaher go up and down completely randomly.

Pair Corralation between Deutsche Bank and Danaher

Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 0.87 times more return on investment than Danaher. However, Deutsche Bank Aktiengesellschaft is 1.15 times less risky than Danaher. It trades about 0.16 of its potential returns per unit of risk. Danaher is currently generating about 0.0 per unit of risk. If you would invest  9,018  in Deutsche Bank Aktiengesellschaft on September 4, 2024 and sell it today you would earn a total of  1,572  from holding Deutsche Bank Aktiengesellschaft or generate 17.43% return on investment over 90 days.

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

Deutsche Bank Aktiengesellscha  vs.  Danaher

Deutsche Bank Aktien

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Deutsche Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Danaher

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danaher has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Danaher is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Deutsche Bank and Danaher

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

The idea behind Deutsche Bank Aktiengesellschaft and Danaher 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.