Correlation Between Delta Technologies and Commerzbank

Can any of the company-specific risk be diversified away by investing in both Delta Technologies and Commerzbank 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 Delta Technologies and Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delta Technologies Nyrt and Commerzbank AG, you can compare the effects of market volatilities on Delta Technologies and Commerzbank 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 Delta Technologies with a short position of Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Technologies and Commerzbank.

Diversification Opportunities for Delta Technologies and Commerzbank

-0.09

Correlation Coefficient

Delta Technologies  Commerzbank

Good diversification

The 3 months correlation between Delta and Commerzbank is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Delta Technologies Nyrt and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG and Delta Technologies 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 Delta Technologies Nyrt are associated (or correlated) with Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of Delta Technologies i.e., Delta Technologies and Commerzbank go up and down completely randomly.

Pair Corralation between Delta Technologies and Commerzbank

Assuming the 90 days trading horizon Delta Technologies is expected to generate 13.83 times less return on investment than Commerzbank. In addition to that, Delta Technologies is 1.4 times more volatile than Commerzbank AG. It trades about 0.03 of its total potential returns per unit of risk. Commerzbank AG is currently generating about 0.54 per unit of volatility. If you would invest  595,400  in Commerzbank AG on November 28, 2024 and sell it today you would earn a total of  218,000  from holding Commerzbank AG or generate 36.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.9%
Values	Daily Returns

Delta Technologies Nyrt  vs.  Commerzbank AG

Delta Technologies Nyrt

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Technologies Nyrt are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Delta Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Commerzbank AG

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Commerzbank AG are ranked lower than 42 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Commerzbank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Technologies and Commerzbank

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

The idea behind Delta Technologies Nyrt and Commerzbank AG 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.