Correlation Between Deutsche Brse and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Deutsche Brse and Dow Jones 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 Brse and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Brse AG and Dow Jones Industrial, you can compare the effects of market volatilities on Deutsche Brse and Dow Jones 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 Brse with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Brse and Dow Jones.
Diversification Opportunities for Deutsche Brse and Dow Jones
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Dow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Brse AG and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Deutsche Brse 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 Brse AG are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Deutsche Brse i.e., Deutsche Brse and Dow Jones go up and down completely randomly.
Pair Corralation between Deutsche Brse and Dow Jones
Assuming the 90 days horizon Deutsche Brse AG is expected to generate 1.8 times more return on investment than Dow Jones. However, Deutsche Brse is 1.8 times more volatile than Dow Jones Industrial. It trades about 0.25 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.05 per unit of risk. If you would invest 20,960 in Deutsche Brse AG on September 13, 2024 and sell it today you would earn a total of 1,110 from holding Deutsche Brse AG or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Deutsche Brse AG vs. Dow Jones Industrial
Performance |
| Timeline |
Deutsche Brse and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Deutsche Brse AG
Pair trading matchups for Deutsche Brse
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Deutsche Brse and Dow Jones
The main advantage of trading using opposite Deutsche Brse and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Brse position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Deutsche Brse vs. CME Group | Deutsche Brse vs. Intercontinental Exchange | Deutsche Brse vs. Hong Kong Exchanges | Deutsche Brse vs. London Stock Exchange |
| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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