Correlation Between Deutsche Bank and Air Lease

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

Diversification Opportunities for Deutsche Bank and Air Lease

-0.58

Correlation Coefficient

Deutsche Bank  Air Lease

Excellent diversification

The 3 months correlation between Deutsche and Air is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Air Lease go up and down completely randomly.

Pair Corralation between Deutsche Bank and Air Lease

Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 1.35 times more return on investment than Air Lease. However, Deutsche Bank is 1.35 times more volatile than Air Lease. It trades about 0.21 of its potential returns per unit of risk. Air Lease is currently generating about -0.05 per unit of risk. If you would invest  1,631  in Deutsche Bank Aktiengesellschaft on December 23, 2024 and sell it today you would earn a total of  597.00  from holding Deutsche Bank Aktiengesellschaft or generate 36.6% return on investment over 90 days.

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

Deutsche Bank Aktiengesellscha  vs.  Air Lease

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 16 (%) 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.

Air Lease

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Air Lease is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Deutsche Bank and Air Lease

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

The idea behind Deutsche Bank Aktiengesellschaft and Air Lease 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 CEOs Directory module to screen CEOs from public companies around the world.