Correlation Between Deutsche Bank and Trinity Capital

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

Diversification Opportunities for Deutsche Bank and Trinity Capital

0.29

Correlation Coefficient

Deutsche Bank  Trinity Capital

Modest diversification

The 3 months correlation between Deutsche and Trinity is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Trinity Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity 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 Trinity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Capital has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Trinity Capital go up and down completely randomly.

Pair Corralation between Deutsche Bank and Trinity Capital

Allowing for the 90-day total investment horizon Deutsche Bank AG is expected to under-perform the Trinity Capital. In addition to that, Deutsche Bank is 1.08 times more volatile than Trinity Capital. It trades about -0.07 of its total potential returns per unit of risk. Trinity Capital is currently generating about 0.06 per unit of volatility. If you would invest  1,394  in Trinity Capital on August 20, 2024 and sell it today you would earn a total of  25.00  from holding Trinity Capital or generate 1.79% return on investment over 90 days.

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

Deutsche Bank AG  vs.  Trinity Capital

Deutsche Bank AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Deutsche Bank may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Trinity Capital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trinity Capital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Trinity Capital is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Deutsche Bank and Trinity Capital

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

The idea behind Deutsche Bank AG and Trinity 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.