Correlation Between Banco Santander and Deutsche Bank
Can any of the company-specific risk be diversified away by investing in both Banco Santander 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 Banco Santander and Deutsche Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Brasil and Deutsche Bank AG, you can compare the effects of market volatilities on Banco Santander 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 Banco Santander with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Deutsche Bank.
Diversification Opportunities for Banco Santander and Deutsche Bank
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and Deutsche is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil 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 Banco Santander 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 Banco Santander Brasil 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 Banco Santander i.e., Banco Santander and Deutsche Bank go up and down completely randomly.
Pair Corralation between Banco Santander and Deutsche Bank
Given the investment horizon of 90 days Banco Santander is expected to generate 8.73 times less return on investment than Deutsche Bank. But when comparing it to its historical volatility, Banco Santander Brasil is 1.43 times less risky than Deutsche Bank. It trades about 0.03 of its potential returns per unit of risk. Deutsche Bank AG is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,359 in Deutsche Bank AG on February 3, 2024 and sell it today you would earn a total of 260.00 from holding Deutsche Bank AG or generate 19.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Banco Santander Brasil vs. Deutsche Bank AG
Performance |
Timeline |
Banco Santander Brasil |
Deutsche Bank AG |
Banco Santander and Deutsche Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banco Santander and Deutsche Bank
The main advantage of trading using opposite Banco Santander and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander 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.Banco Santander vs. JPMorgan Chase Co | Banco Santander vs. Citigroup | Banco Santander vs. Wells Fargo | Banco Santander vs. Toronto Dominion Bank |
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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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