Correlation Between Deutsche Bank and Netcapital

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

Diversification Opportunities for Deutsche Bank and Netcapital

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Deutsche and Netcapital is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Netcapital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcapital 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 Netcapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcapital has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Netcapital go up and down completely randomly.

Pair Corralation between Deutsche Bank and Netcapital

Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 0.23 times more return on investment than Netcapital. However, Deutsche Bank AG is 4.32 times less risky than Netcapital. It trades about 0.1 of its potential returns per unit of risk. Netcapital is currently generating about -0.07 per unit of risk. If you would invest  1,102  in Deutsche Bank AG on September 6, 2024 and sell it today you would earn a total of  645.00  from holding Deutsche Bank AG or generate 58.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Deutsche Bank AG  vs.  Netcapital

 Performance 
       Timeline  
Deutsche Bank AG 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 6 (%) 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.
Netcapital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Netcapital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Netcapital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Deutsche Bank and Netcapital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deutsche Bank and Netcapital

The main advantage of trading using opposite Deutsche Bank and Netcapital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Netcapital 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 Netcapital will offset losses from the drop in Netcapital's long position.
The idea behind Deutsche Bank AG and Netcapital 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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