Correlation Between Sims Metal and Deutsche Bank
Can any of the company-specific risk be diversified away by investing in both Sims Metal and Deutsche Bank 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 Sims Metal and Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims Metal Management and Deutsche Bank Aktiengesellschaft, you can compare the effects of market volatilities on Sims Metal and Deutsche Bank 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 Sims Metal with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and Deutsche Bank.
Diversification Opportunities for Sims Metal and Deutsche Bank
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sims and Deutsche is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and Deutsche Bank Aktiengesellscha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank Aktien and Sims Metal 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 Sims Metal Management are associated (or correlated) with Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank Aktien has no effect on the direction of Sims Metal i.e., Sims Metal and Deutsche Bank go up and down completely randomly.
Pair Corralation between Sims Metal and Deutsche Bank
Assuming the 90 days horizon Sims Metal is expected to generate 1.36 times less return on investment than Deutsche Bank. But when comparing it to its historical volatility, Sims Metal Management is 1.18 times less risky than Deutsche Bank. It trades about 0.22 of its potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,635 in Deutsche Bank Aktiengesellschaft on December 22, 2024 and sell it today you would earn a total of 603.00 from holding Deutsche Bank Aktiengesellschaft or generate 36.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sims Metal Management vs. Deutsche Bank Aktiengesellscha
Performance |
Timeline |
Sims Metal Management |
Deutsche Bank Aktien |
Sims Metal and Deutsche Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sims Metal and Deutsche Bank
The main advantage of trading using opposite Sims Metal and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, Deutsche Bank 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 Deutsche Bank will offset losses from the drop in Deutsche Bank's long position.Sims Metal vs. Seven West Media | Sims Metal vs. CNVISION MEDIA | Sims Metal vs. ATRESMEDIA | Sims Metal vs. SENECA FOODS A |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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