Correlation Between Deutsche Bank and Disney

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

Diversification Opportunities for Deutsche Bank and Disney

0.34

Correlation Coefficient

Deutsche Bank  Disney

Weak diversification

The 3 months correlation between Deutsche and Disney is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Disney go up and down completely randomly.

Pair Corralation between Deutsche Bank and Disney

Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 0.4 times more return on investment than Disney. However, Deutsche Bank Aktiengesellschaft is 2.49 times less risky than Disney. It trades about 0.13 of its potential returns per unit of risk. The Walt Disney is currently generating about -0.12 per unit of risk. If you would invest  35,804  in Deutsche Bank Aktiengesellschaft on October 11, 2024 and sell it today you would earn a total of  296.00  from holding Deutsche Bank Aktiengesellschaft or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.0%
Values	Daily Returns

Deutsche Bank Aktiengesellscha  vs.  The Walt Disney

Deutsche Bank Aktien

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Deutsche Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Walt Disney

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Disney showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Bank and Disney

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

The idea behind Deutsche Bank Aktiengesellschaft and The Walt Disney 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.