Correlation Between Deutsche Brse and LONDON STEXUNSPADRS12
Can any of the company-specific risk be diversified away by investing in both Deutsche Brse and LONDON STEXUNSPADRS12 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 LONDON STEXUNSPADRS12 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 LONDON STEXUNSPADRS12, you can compare the effects of market volatilities on Deutsche Brse and LONDON STEXUNSPADRS12 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 LONDON STEXUNSPADRS12. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Brse and LONDON STEXUNSPADRS12.
Diversification Opportunities for Deutsche Brse and LONDON STEXUNSPADRS12
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Deutsche and LONDON is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Brse AG and LONDON STEXUNSPADRS12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LONDON STEXUNSPADRS12 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 LONDON STEXUNSPADRS12. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LONDON STEXUNSPADRS12 has no effect on the direction of Deutsche Brse i.e., Deutsche Brse and LONDON STEXUNSPADRS12 go up and down completely randomly.
Pair Corralation between Deutsche Brse and LONDON STEXUNSPADRS12
Assuming the 90 days trading horizon Deutsche Brse is expected to generate 1.33 times less return on investment than LONDON STEXUNSPADRS12. But when comparing it to its historical volatility, Deutsche Brse AG is 1.38 times less risky than LONDON STEXUNSPADRS12. It trades about 0.08 of its potential returns per unit of risk. LONDON STEXUNSPADRS12 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,098 in LONDON STEXUNSPADRS12 on November 2, 2024 and sell it today you would earn a total of 1,362 from holding LONDON STEXUNSPADRS12 or generate 64.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Brse AG vs. LONDON STEXUNSPADRS12
Performance |
| Timeline |
| Deutsche Brse AG |
| LONDON STEXUNSPADRS12 |
Deutsche Brse and LONDON STEXUNSPADRS12 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Brse and LONDON STEXUNSPADRS12
The main advantage of trading using opposite Deutsche Brse and LONDON STEXUNSPADRS12 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Brse position performs unexpectedly, LONDON STEXUNSPADRS12 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 LONDON STEXUNSPADRS12 will offset losses from the drop in LONDON STEXUNSPADRS12's long position.| Deutsche Brse vs. TERADATA | Deutsche Brse vs. Teradata Corp | Deutsche Brse vs. JAPAN TOBACCO UNSPADR12 | Deutsche Brse vs. CN DATANG C |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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