Correlation Between Deutsche Bank and Townsquare Media

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

Diversification Opportunities for Deutsche Bank and Townsquare Media

-0.86

Correlation Coefficient

Deutsche Bank  Townsquare Media

Pay attention - limited upside

The 3 months correlation between Deutsche and Townsquare is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media 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 Townsquare Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Townsquare Media has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Townsquare Media go up and down completely randomly.

Pair Corralation between Deutsche Bank and Townsquare Media

Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 0.93 times more return on investment than Townsquare Media. However, Deutsche Bank Aktiengesellschaft is 1.08 times less risky than Townsquare Media. It trades about 0.27 of its potential returns per unit of risk. Townsquare Media is currently generating about -0.13 per unit of risk. If you would invest  1,640  in Deutsche Bank Aktiengesellschaft on December 24, 2024 and sell it today you would earn a total of  646.00  from holding Deutsche Bank Aktiengesellschaft or generate 39.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Deutsche Bank Aktiengesellscha  vs.  Townsquare Media

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. In spite of comparatively uncertain forward-looking signals, Deutsche Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Townsquare Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Townsquare Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Deutsche Bank and Townsquare Media

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

The idea behind Deutsche Bank Aktiengesellschaft and Townsquare Media 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.