Correlation Between Deutsche Bank and Enterprise Bancorp
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Enterprise Bancorp 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 Enterprise Bancorp 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 Enterprise Bancorp, you can compare the effects of market volatilities on Deutsche Bank and Enterprise Bancorp 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 Enterprise Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Enterprise Bancorp.
Diversification Opportunities for Deutsche Bank and Enterprise Bancorp
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Deutsche and Enterprise is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Enterprise Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Bancorp 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 Enterprise Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Bancorp has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Enterprise Bancorp go up and down completely randomly.
Pair Corralation between Deutsche Bank and Enterprise Bancorp
Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 1.13 times less return on investment than Enterprise Bancorp. In addition to that, Deutsche Bank is 2.44 times more volatile than Enterprise Bancorp. It trades about 0.13 of its total potential returns per unit of risk. Enterprise Bancorp is currently generating about 0.35 per unit of volatility. If you would invest 2,401 in Enterprise Bancorp on February 21, 2024 and sell it today you would earn a total of 226.00 from holding Enterprise Bancorp or generate 9.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Deutsche Bank AG vs. Enterprise Bancorp
Performance |
Timeline |
Deutsche Bank AG |
Enterprise Bancorp |
Deutsche Bank and Enterprise Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Deutsche Bank and Enterprise Bancorp
The main advantage of trading using opposite Deutsche Bank and Enterprise Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Enterprise Bancorp 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 Enterprise Bancorp will offset losses from the drop in Enterprise Bancorp's long position.Deutsche Bank vs. First Northwest Bancorp | Deutsche Bank vs. First Capital | Deutsche Bank vs. HomeTrust Bancshares |
Enterprise Bancorp vs. First Northwest Bancorp | Enterprise Bancorp vs. First Capital | Enterprise Bancorp vs. HomeTrust Bancshares |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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