Correlation Between Deutsche Bank and Walmart

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

By analyzing existing cross correlation between Deutsche Bank Aktiengesellschaft and Walmart, you can compare the effects of market volatilities on Deutsche Bank and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Walmart.

Diversification Opportunities for Deutsche Bank and Walmart

-0.62

Correlation Coefficient

Deutsche Bank  Walmart

Excellent diversification

The 3 months correlation between Deutsche and Walmart is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank Aktiengesellscha and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Aktiengesellschaft are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Walmart go up and down completely randomly.

Pair Corralation between Deutsche Bank and Walmart

Assuming the 90 days trading horizon Deutsche Bank Aktiengesellschaft is expected to generate 2.86 times more return on investment than Walmart. However, Deutsche Bank is 2.86 times more volatile than Walmart. It trades about 0.09 of its potential returns per unit of risk. Walmart is currently generating about 0.05 per unit of risk. If you would invest  26,020  in Deutsche Bank Aktiengesellschaft on February 1, 2024 and sell it today you would earn a total of  1,480  from holding Deutsche Bank Aktiengesellschaft or generate 5.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Deutsche Bank Aktiengesellscha  vs.  Walmart

Deutsche Bank Aktien

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Deutsche Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Walmart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Deutsche Bank and Walmart

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

The idea behind Deutsche Bank Aktiengesellschaft and Walmart 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.