Correlation Between Deutsche Bank and Capitol Federal

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

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

Diversification Opportunities for Deutsche Bank and Capitol Federal

-0.78

Correlation Coefficient

Deutsche Bank  Capitol Federal

Pay attention - limited upside

The 3 months correlation between Deutsche and Capitol is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and Deutsche Bank 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 Bank AG are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Capitol Federal go up and down completely randomly.

Pair Corralation between Deutsche Bank and Capitol Federal

Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 1.03 times more return on investment than Capitol Federal. However, Deutsche Bank is 1.03 times more volatile than Capitol Federal Financial. It trades about 0.18 of its potential returns per unit of risk. Capitol Federal Financial is currently generating about -0.18 per unit of risk. If you would invest  1,285  in Deutsche Bank AG on January 31, 2024 and sell it today you would earn a total of  339.00  from holding Deutsche Bank AG or generate 26.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Deutsche Bank AG  vs.  Capitol Federal Financial

Deutsche Bank AG

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Deutsche Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Capitol Federal Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capitol Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Deutsche Bank and Capitol Federal

The main advantage of trading using opposite Deutsche Bank and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Capitol Federal 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 Capitol Federal will offset losses from the drop in Capitol Federal's long position.

The idea behind Deutsche Bank AG and Capitol Federal Financial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.