Correlation Between Deutsche Bank and Blackrock Innovation

Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Blackrock Innovation 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 Blackrock Innovation 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 Blackrock Innovation Growth, you can compare the effects of market volatilities on Deutsche Bank and Blackrock Innovation 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 Blackrock Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Blackrock Innovation.

Diversification Opportunities for Deutsche Bank and Blackrock Innovation

0.31

Correlation Coefficient

Deutsche Bank  Blackrock Innovation

Weak diversification

The 3 months correlation between Deutsche and Blackrock is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Blackrock Innovation Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Innovation 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 Blackrock Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Innovation has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Blackrock Innovation go up and down completely randomly.

Pair Corralation between Deutsche Bank and Blackrock Innovation

Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 2.28 times less return on investment than Blackrock Innovation. In addition to that, Deutsche Bank is 1.73 times more volatile than Blackrock Innovation Growth. It trades about 0.05 of its total potential returns per unit of risk. Blackrock Innovation Growth is currently generating about 0.21 per unit of volatility. If you would invest  706.00  in Blackrock Innovation Growth on September 5, 2024 and sell it today you would earn a total of  101.00  from holding Blackrock Innovation Growth or generate 14.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Deutsche Bank AG  vs.  Blackrock Innovation Growth

Deutsche Bank AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Deutsche Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Innovation

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Innovation Growth are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Blackrock Innovation showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Bank and Blackrock Innovation

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

The idea behind Deutsche Bank AG and Blackrock Innovation Growth 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.