Correlation Between Deutsche Bank and Uber Technologies

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

Diversification Opportunities for Deutsche Bank and Uber Technologies

0.73

Correlation Coefficient

Deutsche Bank  Uber Technologies

Poor diversification

The 3 months correlation between Deutsche and Uber is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Uber Technologies go up and down completely randomly.

Pair Corralation between Deutsche Bank and Uber Technologies

Assuming the 90 days trading horizon Deutsche Bank is expected to generate 1.48 times less return on investment than Uber Technologies. But when comparing it to its historical volatility, Deutsche Bank Aktiengesellschaft is 1.08 times less risky than Uber Technologies. It trades about 0.07 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,628  in Uber Technologies on September 4, 2024 and sell it today you would earn a total of  7,501  from holding Uber Technologies or generate 206.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.0%
Values	Daily Returns

Deutsche Bank Aktiengesellscha  vs.  Uber Technologies

Deutsche Bank Aktien

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 11 (%) 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.

Uber Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Uber Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Deutsche Bank and Uber Technologies

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

The idea behind Deutsche Bank Aktiengesellschaft and Uber Technologies 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.