Correlation Between Deutsche Post and All American

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

By analyzing existing cross correlation between Deutsche Post AG and All American Gld, you can compare the effects of market volatilities on Deutsche Post and All American 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 Post with a short position of All American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and All American.

Diversification Opportunities for Deutsche Post and All American

-0.33

Correlation Coefficient

Deutsche Post  All American

Very good diversification

The 3 months correlation between Deutsche and All is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and All American Gld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All American Gld and Deutsche Post 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 Post AG are associated (or correlated) with All American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All American Gld has no effect on the direction of Deutsche Post i.e., Deutsche Post and All American go up and down completely randomly.

Pair Corralation between Deutsche Post and All American

Assuming the 90 days horizon Deutsche Post AG is expected to generate 0.26 times more return on investment than All American. However, Deutsche Post AG is 3.83 times less risky than All American. It trades about 0.28 of its potential returns per unit of risk. All American Gld is currently generating about -0.19 per unit of risk. If you would invest  3,466  in Deutsche Post AG on December 11, 2024 and sell it today you would earn a total of  1,068  from holding Deutsche Post AG or generate 30.81% return on investment over 90 days.

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

Deutsche Post AG  vs.  All American Gld

Deutsche Post AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Post AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Deutsche Post reported solid returns over the last few months and may actually be approaching a breakup point.

All American Gld

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in All American Gld are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, All American exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Post and All American

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

The idea behind Deutsche Post AG and All American Gld 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.