Correlation Between Deutsche Bank and Investcorp Europe

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

Diversification Opportunities for Deutsche Bank and Investcorp Europe

0.23

Correlation Coefficient

Deutsche Bank  Investcorp Europe

Modest diversification

The 3 months correlation between Deutsche and Investcorp is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Investcorp Europe Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Europe 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 Investcorp Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp Europe has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Investcorp Europe go up and down completely randomly.

Pair Corralation between Deutsche Bank and Investcorp Europe

Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 3.23 times more return on investment than Investcorp Europe. However, Deutsche Bank is 3.23 times more volatile than Investcorp Europe Acquisition. It trades about 0.1 of its potential returns per unit of risk. Investcorp Europe Acquisition is currently generating about 0.21 per unit of risk. If you would invest  1,630  in Deutsche Bank AG on September 16, 2024 and sell it today you would earn a total of  159.00  from holding Deutsche Bank AG or generate 9.75% 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.  Investcorp Europe Acquisition

Deutsche Bank AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Deutsche Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Investcorp Europe

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Europe Acquisition are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental indicators, Investcorp Europe may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Deutsche Bank and Investcorp Europe

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

The idea behind Deutsche Bank AG and Investcorp Europe Acquisition 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.