Correlation Between Société Générale and Deutsche Bank

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

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

Diversification Opportunities for Société Générale and Deutsche Bank

0.34

Correlation Coefficient

Société Générale  Deutsche Bank

Weak diversification

The 3 months correlation between Société and Deutsche is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Socit Gnrale Socit 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 Société Générale 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 Socit Gnrale Socit 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 Société Générale i.e., Société Générale and Deutsche Bank go up and down completely randomly.

Pair Corralation between Société Générale and Deutsche Bank

Assuming the 90 days trading horizon Socit Gnrale Socit is expected to generate 1.21 times more return on investment than Deutsche Bank. However, Société Générale is 1.21 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about 0.42 of its potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.04 per unit of risk. If you would invest  2,457  in Socit Gnrale Socit on October 5, 2024 and sell it today you would earn a total of  254.00  from holding Socit Gnrale Socit or generate 10.34% return on investment over 90 days.

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

Socit Gnrale Socit  vs.  Deutsche Bank Aktiengesellscha

Socit Gnrale Socit

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Socit Gnrale Socit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile technical and fundamental indicators, Société Générale unveiled solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Bank Aktien

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Deutsche Bank Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Deutsche Bank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Société Générale and Deutsche Bank

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

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.