Correlation Between Deutsche Bank and Gladstone Capital

Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Gladstone Capital 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 Gladstone Capital 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 Gladstone Capital, you can compare the effects of market volatilities on Deutsche Bank and Gladstone Capital 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 Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Gladstone Capital.

Diversification Opportunities for Deutsche Bank and Gladstone Capital

-0.33

Correlation Coefficient

Deutsche Bank  Gladstone Capital

Very good diversification

The 3 months correlation between Deutsche and Gladstone is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital 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 Gladstone Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Capital has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Gladstone Capital go up and down completely randomly.

Pair Corralation between Deutsche Bank and Gladstone Capital

Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to generate 1.63 times more return on investment than Gladstone Capital. However, Deutsche Bank is 1.63 times more volatile than Gladstone Capital. It trades about 0.13 of its potential returns per unit of risk. Gladstone Capital is currently generating about -0.08 per unit of risk. If you would invest  1,748  in Deutsche Bank AG on January 9, 2025 and sell it today you would earn a total of  457.00  from holding Deutsche Bank AG or generate 26.14% return on investment over 90 days.

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

Deutsche Bank AG  vs.  Gladstone Capital

Deutsche Bank AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 9 (%) 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.

Gladstone Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gladstone Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Deutsche Bank and Gladstone Capital

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

The idea behind Deutsche Bank AG and Gladstone Capital 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.