Correlation Between Deutsche Lufthansa and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Deutsche Lufthansa and US Bancorp 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 Deutsche Lufthansa and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Lufthansa AG and US Bancorp PERP, you can compare the effects of market volatilities on Deutsche Lufthansa and US Bancorp 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 Deutsche Lufthansa with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Lufthansa and US Bancorp.
Diversification Opportunities for Deutsche Lufthansa and US Bancorp
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Deutsche and USB-PA is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Lufthansa AG and US Bancorp PERP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp PERP and Deutsche Lufthansa 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 Deutsche Lufthansa AG are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp PERP has no effect on the direction of Deutsche Lufthansa i.e., Deutsche Lufthansa and US Bancorp go up and down completely randomly.
Pair Corralation between Deutsche Lufthansa and US Bancorp
Assuming the 90 days horizon Deutsche Lufthansa AG is expected to under-perform the US Bancorp. In addition to that, Deutsche Lufthansa is 2.46 times more volatile than US Bancorp PERP. It trades about -0.08 of its total potential returns per unit of risk. US Bancorp PERP is currently generating about 0.04 per unit of volatility. If you would invest 86,738 in US Bancorp PERP on January 24, 2024 and sell it today you would earn a total of 787.00 from holding US Bancorp PERP or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Lufthansa AG vs. US Bancorp PERP
Performance |
| Timeline |
| Deutsche Lufthansa |
| US Bancorp PERP |
Deutsche Lufthansa and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Lufthansa and US Bancorp
The main advantage of trading using opposite Deutsche Lufthansa and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Lufthansa position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| Deutsche Lufthansa vs. Copa Holdings SA | Deutsche Lufthansa vs. United Airlines Holdings | Deutsche Lufthansa vs. Delta Air Lines | Deutsche Lufthansa vs. SkyWest |
| US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial | US Bancorp vs. US Bancorp | US Bancorp vs. KeyCorp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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