Correlation Between Grupo Sports and Deutsche Bank

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

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

Diversification Opportunities for Grupo Sports and Deutsche Bank

0.74

Correlation Coefficient

Grupo Sports  Deutsche Bank

Poor diversification

The 3 months correlation between Grupo and Deutsche is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Sports World 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 Grupo Sports 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 Grupo Sports World 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 Grupo Sports i.e., Grupo Sports and Deutsche Bank go up and down completely randomly.

Pair Corralation between Grupo Sports and Deutsche Bank

Assuming the 90 days trading horizon Grupo Sports is expected to generate 2.29 times less return on investment than Deutsche Bank. But when comparing it to its historical volatility, Grupo Sports World is 2.11 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 0.24 of returns per unit of risk over similar time horizon. If you would invest  33,811  in Deutsche Bank Aktiengesellschaft on September 17, 2024 and sell it today you would earn a total of  1,993  from holding Deutsche Bank Aktiengesellschaft or generate 5.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.0%
Values	Daily Returns

Grupo Sports World  vs.  Deutsche Bank Aktiengesellscha

Grupo Sports World

Risk-Adjusted Performance

12 of 100

Good

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

Deutsche Bank Aktien

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Deutsche Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Sports and Deutsche Bank

The main advantage of trading using opposite Grupo Sports and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Sports 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 Grupo Sports World 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.