Correlation Between BRB Banco and Deutsche Bank

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

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

Diversification Opportunities for BRB Banco and Deutsche Bank

-0.04

Correlation Coefficient

BRB Banco  Deutsche Bank

Good diversification

The 3 months correlation between BRB and Deutsche is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding BRB Banco 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 BRB Banco 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 BRB Banco 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 BRB Banco i.e., BRB Banco and Deutsche Bank go up and down completely randomly.

Pair Corralation between BRB Banco and Deutsche Bank

Assuming the 90 days trading horizon BRB Banco is expected to generate 1.31 times less return on investment than Deutsche Bank. In addition to that, BRB Banco is 4.91 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about 0.03 of its total potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.18 per unit of volatility. If you would invest  7,206  in Deutsche Bank Aktiengesellschaft on March 14, 2024 and sell it today you would earn a total of  1,578  from holding Deutsche Bank Aktiengesellschaft or generate 21.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BRB Banco  vs.  Deutsche Bank Aktiengesellscha

BRB Banco

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BRB Banco are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BRB Banco unveiled solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Bank Aktien

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Deutsche Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRB Banco and Deutsche Bank

The main advantage of trading using opposite BRB Banco and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRB Banco 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 BRB Banco 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.