Correlation Between Air Transport and Deutsche Bank

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

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

Diversification Opportunities for Air Transport and Deutsche Bank

-0.65

Correlation Coefficient

Air Transport  Deutsche Bank

Excellent diversification

The 3 months correlation between Air and Deutsche is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services 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 Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and Deutsche Bank go up and down completely randomly.

Pair Corralation between Air Transport and Deutsche Bank

Assuming the 90 days trading horizon Air Transport Services is expected to under-perform the Deutsche Bank. In addition to that, Air Transport is 1.86 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about -0.13 of its total potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.23 per unit of volatility. If you would invest  21,411  in Deutsche Bank Aktiengesellschaft on February 20, 2024 and sell it today you would earn a total of  8,188  from holding Deutsche Bank Aktiengesellschaft or generate 38.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

Air Transport Services  vs.  Deutsche Bank Aktiengesellscha

Air Transport Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Transport Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Deutsche Bank Aktien

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 18 (%) 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 Air Transport and Deutsche Bank

The main advantage of trading using opposite Air Transport and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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 Air Transport Services 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.