Correlation Between Deutsche Bank and MNB Holdings

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

Diversification Opportunities for Deutsche Bank and MNB Holdings

0.24

Correlation Coefficient

Deutsche Bank  MNB Holdings

Modest diversification

The 3 months correlation between Deutsche and MNB is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and MNB Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MNB Holdings Corp 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 MNB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MNB Holdings Corp has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and MNB Holdings go up and down completely randomly.

Pair Corralation between Deutsche Bank and MNB Holdings

Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 2.8 times less return on investment than MNB Holdings. In addition to that, Deutsche Bank is 1.81 times more volatile than MNB Holdings Corp. It trades about 0.02 of its total potential returns per unit of risk. MNB Holdings Corp is currently generating about 0.12 per unit of volatility. If you would invest  2,350  in MNB Holdings Corp on September 25, 2024 and sell it today you would earn a total of  150.00  from holding MNB Holdings Corp or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Deutsche Bank AG  vs.  MNB Holdings Corp

Deutsche Bank AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 1 (%) 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.

MNB Holdings Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MNB Holdings Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, MNB Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Deutsche Bank and MNB Holdings

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

The idea behind Deutsche Bank AG and MNB Holdings Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.