Correlation Between Diamond Hill and Deutsche Bank
Can any of the company-specific risk be diversified away by investing in both Diamond Hill 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 Diamond Hill and Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Investment and Deutsche Bank AG, you can compare the effects of market volatilities on Diamond Hill 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 Diamond Hill with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Deutsche Bank.
Diversification Opportunities for Diamond Hill and Deutsche Bank
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamond and Deutsche is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Deutsche Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank AG and Diamond Hill 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 Diamond Hill Investment 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 AG has no effect on the direction of Diamond Hill i.e., Diamond Hill and Deutsche Bank go up and down completely randomly.
Pair Corralation between Diamond Hill and Deutsche Bank
Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the Deutsche Bank. But the stock apears to be less risky and, when comparing its historical volatility, Diamond Hill Investment is 1.33 times less risky than Deutsche Bank. The stock trades about 0.0 of its potential returns per unit of risk. The Deutsche Bank AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 939.00 in Deutsche Bank AG on January 25, 2024 and sell it today you would earn a total of 711.00 from holding Deutsche Bank AG or generate 75.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. Deutsche Bank AG
Performance |
| Timeline |
| Diamond Hill Investment |
| Deutsche Bank AG |
Diamond Hill and Deutsche Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Deutsche Bank
The main advantage of trading using opposite Diamond Hill and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill 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.| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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