Correlation Between Deutsche Post and BBX Capital

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

Diversification Opportunities for Deutsche Post and BBX Capital

0.85

Correlation Coefficient

Deutsche Post  BBX Capital

Very poor diversification

The 3 months correlation between Deutsche and BBX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and BBX Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBX Capital 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 BBX Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBX Capital has no effect on the direction of Deutsche Post i.e., Deutsche Post and BBX Capital go up and down completely randomly.

Pair Corralation between Deutsche Post and BBX Capital

Assuming the 90 days horizon Deutsche Post AG is expected to under-perform the BBX Capital. In addition to that, Deutsche Post is 4.31 times more volatile than BBX Capital. It trades about -0.12 of its total potential returns per unit of risk. BBX Capital is currently generating about -0.14 per unit of volatility. If you would invest  805.00  in BBX Capital on August 31, 2024 and sell it today you would lose (33.00) from holding BBX Capital or give up 4.1% of portfolio value over 90 days.

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

Deutsche Post AG  vs.  BBX Capital

Deutsche Post AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Post AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BBX Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BBX Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, BBX Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Deutsche Post and BBX Capital

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

The idea behind Deutsche Post AG and BBX Capital 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.