Correlation Between Carlyle and Deutsche Bank

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

By analyzing existing cross correlation between Carlyle Group and Deutsche Bank AG, you can compare the effects of market volatilities on Carlyle 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 Carlyle with a short position of Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Deutsche Bank.

Diversification Opportunities for Carlyle and Deutsche Bank

0.69

Correlation Coefficient

Carlyle  Deutsche Bank

Poor diversification

The 3 months correlation between Carlyle and Deutsche is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group 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 Carlyle 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 Carlyle Group 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 Carlyle i.e., Carlyle and Deutsche Bank go up and down completely randomly.

Pair Corralation between Carlyle and Deutsche Bank

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 1.28 times more return on investment than Deutsche Bank. However, Carlyle is 1.28 times more volatile than Deutsche Bank AG. It trades about 0.18 of its potential returns per unit of risk. Deutsche Bank AG is currently generating about 0.09 per unit of risk. If you would invest  4,016  in Carlyle Group on August 21, 2024 and sell it today you would earn a total of  1,070  from holding Carlyle Group or generate 26.64% return on investment over 90 days.

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

Carlyle Group  vs.  Deutsche Bank AG

Carlyle Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Bank AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Deutsche Bank may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Carlyle and Deutsche Bank

The main advantage of trading using opposite Carlyle and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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 Carlyle Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.