Correlation Between Deutsche Bank and Sony

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

Diversification Opportunities for Deutsche Bank and Sony

0.31

Correlation Coefficient

Deutsche Bank  Sony

Weak diversification

The 3 months correlation between Deutsche and Sony is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group 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 Sony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Sony go up and down completely randomly.

Pair Corralation between Deutsche Bank and Sony

Assuming the 90 days trading horizon Deutsche Bank is expected to generate 1.64 times less return on investment than Sony. But when comparing it to its historical volatility, Deutsche Bank Aktiengesellschaft is 1.18 times less risky than Sony. It trades about 0.14 of its potential returns per unit of risk. Sony Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  36,400  in Sony Group on September 12, 2024 and sell it today you would earn a total of  8,100  from holding Sony Group or generate 22.25% return on investment over 90 days.

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

Deutsche Bank Aktiengesellscha  vs.  Sony Group

Deutsche Bank Aktien

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 11 (%) 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.

Sony Group

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Deutsche Bank and Sony

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

The idea behind Deutsche Bank Aktiengesellschaft and Sony Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.