Correlation Between Deutsche Post and Security Federal

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

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

Diversification Opportunities for Deutsche Post and Security Federal

-0.58

Correlation Coefficient

Deutsche Post  Security Federal

Excellent diversification

The 3 months correlation between Deutsche and Security is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG and Security Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Federal and Deutsche Post 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 Post AG are associated (or correlated) with Security Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Federal has no effect on the direction of Deutsche Post i.e., Deutsche Post and Security Federal go up and down completely randomly.

Pair Corralation between Deutsche Post and Security Federal

Assuming the 90 days horizon Deutsche Post is expected to generate 2.03 times less return on investment than Security Federal. In addition to that, Deutsche Post is 1.01 times more volatile than Security Federal. It trades about 0.01 of its total potential returns per unit of risk. Security Federal is currently generating about 0.02 per unit of volatility. If you would invest  2,453  in Security Federal on September 26, 2024 and sell it today you would earn a total of  247.00  from holding Security Federal or generate 10.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.53%
Values	Daily Returns

Deutsche Post AG  vs.  Security Federal

Deutsche Post AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Post AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Security Federal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Deutsche Post and Security Federal

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

The idea behind Deutsche Post AG and Security Federal 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.