Correlation Between Deutsche Bank and Grupo Profuturo

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

Diversification Opportunities for Deutsche Bank and Grupo Profuturo

0.6

Correlation Coefficient

Deutsche Bank  Grupo Profuturo

Poor diversification

The 3 months correlation between Deutsche and Grupo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Grupo Profuturo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Profuturo SAB 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 Grupo Profuturo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Profuturo SAB has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Grupo Profuturo go up and down completely randomly.

Pair Corralation between Deutsche Bank and Grupo Profuturo

Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 1.92 times more return on investment than Grupo Profuturo. However, Deutsche Bank is 1.92 times more volatile than Grupo Profuturo SAB. It trades about 0.09 of its potential returns per unit of risk. Grupo Profuturo SAB is currently generating about 0.09 per unit of risk. If you would invest  30,500  in Deutsche Bank Aktiengesellschaft on October 7, 2024 and sell it today you would earn a total of  5,600  from holding Deutsche Bank Aktiengesellschaft or generate 18.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

Deutsche Bank Aktiengesellscha  vs.  Grupo Profuturo SAB

Deutsche Bank Aktien

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Deutsche Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Grupo Profuturo SAB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Profuturo SAB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Grupo Profuturo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Deutsche Bank and Grupo Profuturo

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

The idea behind Deutsche Bank Aktiengesellschaft and Grupo Profuturo SAB 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.