Correlation Between Deutsche Bank and POSBO UNSPADRS/20YC1

Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS20YC1, you can compare the effects of market volatilities on Deutsche Bank and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and POSBO UNSPADRS/20YC1.

Diversification Opportunities for Deutsche Bank and POSBO UNSPADRS/20YC1

0.88

Correlation Coefficient

Deutsche Bank  POSBO UNSPADRS/20YC1

Very poor diversification

The 3 months correlation between Deutsche and POSBO is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and POSBO UNSPADRS20YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSBO UNSPADRS/20YC1 has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and POSBO UNSPADRS/20YC1 go up and down completely randomly.

Pair Corralation between Deutsche Bank and POSBO UNSPADRS/20YC1

Assuming the 90 days horizon Deutsche Bank Aktiengesellschaft is expected to generate 1.5 times more return on investment than POSBO UNSPADRS/20YC1. However, Deutsche Bank is 1.5 times more volatile than POSBO UNSPADRS20YC1. It trades about 0.26 of its potential returns per unit of risk. POSBO UNSPADRS20YC1 is currently generating about 0.16 per unit of risk. If you would invest  1,635  in Deutsche Bank Aktiengesellschaft on December 21, 2024 and sell it today you would earn a total of  645.00  from holding Deutsche Bank Aktiengesellschaft or generate 39.45% return on investment over 90 days.

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

Deutsche Bank Aktiengesellscha  vs.  POSBO UNSPADRS20YC1

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 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Deutsche Bank reported solid returns over the last few months and may actually be approaching a breakup point.

POSBO UNSPADRS/20YC1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in POSBO UNSPADRS20YC1 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, POSBO UNSPADRS/20YC1 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Bank and POSBO UNSPADRS/20YC1

The main advantage of trading using opposite Deutsche Bank and POSBO UNSPADRS/20YC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 will offset losses from the drop in POSBO UNSPADRS/20YC1's long position.

The idea behind Deutsche Bank Aktiengesellschaft and POSBO UNSPADRS20YC1 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.