Correlation Between Deutsche Bank and AXA SA

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

Diversification Opportunities for Deutsche Bank and AXA SA

0.0

Correlation Coefficient

Deutsche Bank  AXA SA

Pay attention - limited upside

The 3 months correlation between Deutsche and AXA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA 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 AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and AXA SA go up and down completely randomly.

Pair Corralation between Deutsche Bank and AXA SA

Assuming the 90 days trading horizon Deutsche Bank is expected to generate 1.88 times less return on investment than AXA SA. But when comparing it to its historical volatility, Deutsche Bank Aktiengesellschaft is 2.91 times less risky than AXA SA. It trades about 0.2 of its potential returns per unit of risk. AXA SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  52,122  in AXA SA on December 21, 2024 and sell it today you would earn a total of  34,219  from holding AXA SA or generate 65.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Deutsche Bank Aktiengesellscha  vs.  AXA SA

Deutsche Bank Aktien

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Deutsche Bank showed solid returns over the last few months and may actually be approaching a breakup point.

AXA SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, AXA SA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Bank and AXA SA

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

The idea behind Deutsche Bank Aktiengesellschaft and AXA SA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.