Correlation Between Deutsche Bank and Esquire Financial

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

Diversification Opportunities for Deutsche Bank and Esquire Financial

-0.64

Correlation Coefficient

Deutsche Bank  Esquire Financial

Excellent diversification

The 3 months correlation between Deutsche and Esquire is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial 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 Esquire Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esquire Financial has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Esquire Financial go up and down completely randomly.

Pair Corralation between Deutsche Bank and Esquire Financial

Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 1.17 times less return on investment than Esquire Financial. In addition to that, Deutsche Bank is 1.56 times more volatile than Esquire Financial Holdings. It trades about 0.06 of its total potential returns per unit of risk. Esquire Financial Holdings is currently generating about 0.11 per unit of volatility. If you would invest  4,566  in Esquire Financial Holdings on February 2, 2024 and sell it today you would earn a total of  197.00  from holding Esquire Financial Holdings or generate 4.31% return on investment over 90 days.

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

Deutsche Bank AG  vs.  Esquire Financial Holdings

Deutsche Bank AG

Risk-Adjusted Performance

9 of 100

OK

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.

Esquire Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Esquire Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Esquire Financial is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Deutsche Bank and Esquire Financial

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

The idea behind Deutsche Bank AG and Esquire Financial Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.