Correlation Between Value Grupo and Deutsche Bank

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

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

Diversification Opportunities for Value Grupo and Deutsche Bank

-0.19

Correlation Coefficient

Value Grupo  Deutsche Bank

Good diversification

The 3 months correlation between Value and Deutsche is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Value Grupo Financiero 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 Value Grupo 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 Value Grupo Financiero 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 Value Grupo i.e., Value Grupo and Deutsche Bank go up and down completely randomly.

Pair Corralation between Value Grupo and Deutsche Bank

Assuming the 90 days trading horizon Value Grupo is expected to generate 29.17 times less return on investment than Deutsche Bank. In addition to that, Value Grupo is 1.92 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about 0.0 of its total potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.14 per unit of volatility. If you would invest  31,700  in Deutsche Bank Aktiengesellschaft on September 18, 2024 and sell it today you would earn a total of  4,104  from holding Deutsche Bank Aktiengesellschaft or generate 12.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Value Grupo Financiero  vs.  Deutsche Bank Aktiengesellscha

Value Grupo Financiero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Grupo Financiero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Value Grupo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Value Grupo and Deutsche Bank

The main advantage of trading using opposite Value Grupo and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Grupo 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 Value Grupo Financiero 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.