Correlation Between Deutsche Boerse and Intercontinental
Can any of the company-specific risk be diversified away by investing in both Deutsche Boerse and Intercontinental 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 Boerse and Intercontinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Boerse AG and Intercontinental Exchange, you can compare the effects of market volatilities on Deutsche Boerse and Intercontinental 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 Boerse with a short position of Intercontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Boerse and Intercontinental.
Diversification Opportunities for Deutsche Boerse and Intercontinental
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deutsche and Intercontinental is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Boerse AG and Intercontinental Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercontinental Exchange and Deutsche Boerse 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 Boerse AG are associated (or correlated) with Intercontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercontinental Exchange has no effect on the direction of Deutsche Boerse i.e., Deutsche Boerse and Intercontinental go up and down completely randomly.
Pair Corralation between Deutsche Boerse and Intercontinental
Assuming the 90 days horizon Deutsche Boerse AG is expected to under-perform the Intercontinental. But the pink sheet apears to be less risky and, when comparing its historical volatility, Deutsche Boerse AG is 1.37 times less risky than Intercontinental. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Intercontinental Exchange is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 16,644 in Intercontinental Exchange on August 28, 2024 and sell it today you would lose (681.00) from holding Intercontinental Exchange or give up 4.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Boerse AG vs. Intercontinental Exchange
Performance |
| Timeline |
| Deutsche Boerse AG |
| Intercontinental Exchange |
Deutsche Boerse and Intercontinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Boerse and Intercontinental
The main advantage of trading using opposite Deutsche Boerse and Intercontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Boerse position performs unexpectedly, Intercontinental 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 Intercontinental will offset losses from the drop in Intercontinental's long position.| Deutsche Boerse vs. London Stock Exchange | Deutsche Boerse vs. Hong Kong Exchanges | Deutsche Boerse vs. Deutsche Brse AG | Deutsche Boerse vs. Singapore Exchange Limited |
| Intercontinental vs. Nasdaq Inc | Intercontinental vs. SP Global | Intercontinental vs. Moodys | Intercontinental vs. FactSet Research Systems |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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