Correlation Between DEUTSCHE and Triton International

Can any of the company-specific risk be diversified away by investing in both DEUTSCHE and Triton International 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 and Triton International 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 Triton International Limited, you can compare the effects of market volatilities on DEUTSCHE and Triton International 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 with a short position of Triton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEUTSCHE and Triton International.

Diversification Opportunities for DEUTSCHE and Triton International

0.65

Correlation Coefficient

DEUTSCHE  Triton International

Poor diversification

The 3 months correlation between DEUTSCHE and Triton is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding DEUTSCHE BANK AG and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International and DEUTSCHE 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 Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of DEUTSCHE i.e., DEUTSCHE and Triton International go up and down completely randomly.

Pair Corralation between DEUTSCHE and Triton International

Assuming the 90 days trading horizon DEUTSCHE BANK AG is expected to under-perform the Triton International. But the bond apears to be less risky and, when comparing its historical volatility, DEUTSCHE BANK AG is 1.34 times less risky than Triton International. The bond trades about -0.04 of its potential returns per unit of risk. The Triton International Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,204  in Triton International Limited on September 24, 2024 and sell it today you would earn a total of  243.00  from holding Triton International Limited or generate 11.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	78.63%
Values	Daily Returns

DEUTSCHE BANK AG  vs.  Triton International Limited

DEUTSCHE BANK AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEUTSCHE BANK AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for DEUTSCHE BANK AG investors.

Triton International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triton International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Triton International is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DEUTSCHE and Triton International

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

The idea behind DEUTSCHE BANK AG and Triton International Limited 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.