Correlation Between Itasa Investimentos and Deutsche Bank

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

By analyzing existing cross correlation between Itasa Investimentos and Deutsche Bank Aktiengesellschaft, you can compare the effects of market volatilities on Itasa Investimentos 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 Itasa Investimentos with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itasa Investimentos and Deutsche Bank.

Diversification Opportunities for Itasa Investimentos and Deutsche Bank

-0.6

Correlation Coefficient

Itasa Investimentos  Deutsche Bank

Excellent diversification

The 3 months correlation between Itasa and Deutsche is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Itasa Investimentos 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 Itasa Investimentos 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 Itasa Investimentos 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 Itasa Investimentos i.e., Itasa Investimentos and Deutsche Bank go up and down completely randomly.

Pair Corralation between Itasa Investimentos and Deutsche Bank

Assuming the 90 days trading horizon Itasa Investimentos is expected to under-perform the Deutsche Bank. But the preferred stock apears to be less risky and, when comparing its historical volatility, Itasa Investimentos is 1.33 times less risky than Deutsche Bank. The preferred stock trades about -0.13 of its potential returns per unit of risk. The Deutsche Bank Aktiengesellschaft is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9,127  in Deutsche Bank Aktiengesellschaft on September 2, 2024 and sell it today you would earn a total of  923.00  from holding Deutsche Bank Aktiengesellschaft or generate 10.11% return on investment over 90 days.

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

Itasa Investimentos  vs.  Deutsche Bank Aktiengesellscha

Itasa Investimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itasa Investimentos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Deutsche Bank Aktien

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Deutsche Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Itasa Investimentos and Deutsche Bank

The main advantage of trading using opposite Itasa Investimentos and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itasa Investimentos 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.

The idea behind Itasa Investimentos and Deutsche Bank Aktiengesellschaft 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.