Correlation Between Eagle Bancorp and Deutsche Bank

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Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Deutsche Bank 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 Eagle Bancorp and Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp Montana and Deutsche Bank AG, you can compare the effects of market volatilities on Eagle Bancorp and Deutsche Bank 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 Eagle Bancorp with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Deutsche Bank.

Diversification Opportunities for Eagle Bancorp and Deutsche Bank

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Eagle and Deutsche is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and Deutsche Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank AG and Eagle Bancorp 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 Eagle Bancorp Montana are associated (or correlated) with Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank AG has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Deutsche Bank go up and down completely randomly.

Pair Corralation between Eagle Bancorp and Deutsche Bank

Given the investment horizon of 90 days Eagle Bancorp Montana is expected to under-perform the Deutsche Bank. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Bancorp Montana is 1.84 times less risky than Deutsche Bank. The stock trades about -0.15 of its potential returns per unit of risk. The Deutsche Bank AG is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,527  in Deutsche Bank AG on January 24, 2024 and sell it today you would earn a total of  97.00  from holding Deutsche Bank AG or generate 6.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Eagle Bancorp Montana  vs.  Deutsche Bank AG

 Performance 
       Timeline  
Eagle Bancorp Montana 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eagle Bancorp Montana has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Deutsche Bank AG 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Deutsche Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Eagle Bancorp and Deutsche Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eagle Bancorp and Deutsche Bank

The main advantage of trading using opposite Eagle Bancorp and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, Deutsche Bank 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 Deutsche Bank will offset losses from the drop in Deutsche Bank's long position.
The idea behind Eagle Bancorp Montana and Deutsche Bank AG 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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