Correlation Between Deutsche Bank and Wizz Air

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

Diversification Opportunities for Deutsche Bank and Wizz Air

0.4

Correlation Coefficient

Deutsche Bank  Wizz Air

Very weak diversification

The 3 months correlation between Deutsche and Wizz is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Wizz Air Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wizz Air Holdings 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 Wizz Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wizz Air Holdings has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Wizz Air go up and down completely randomly.

Pair Corralation between Deutsche Bank and Wizz Air

Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 0.57 times more return on investment than Wizz Air. However, Deutsche Bank Aktiengesellschaft is 1.75 times less risky than Wizz Air. It trades about 0.05 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about -0.02 per unit of risk. If you would invest  1,111  in Deutsche Bank Aktiengesellschaft on October 5, 2024 and sell it today you would earn a total of  570.00  from holding Deutsche Bank Aktiengesellschaft or generate 51.31% return on investment over 90 days.

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

Deutsche Bank Aktiengesellscha  vs.  Wizz Air Holdings

Deutsche Bank Aktien

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Deutsche Bank Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Deutsche Bank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Wizz Air Holdings

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Wizz Air Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, Wizz Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Bank and Wizz Air

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

The idea behind Deutsche Bank Aktiengesellschaft and Wizz Air Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.