Correlation Between Deutsche Boerse and Nasdaq
Can any of the company-specific risk be diversified away by investing in both Deutsche Boerse and Nasdaq 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 Nasdaq 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 Nasdaq Inc, you can compare the effects of market volatilities on Deutsche Boerse and Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Boerse and Nasdaq.
Diversification Opportunities for Deutsche Boerse and Nasdaq
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Deutsche and Nasdaq is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Boerse AG and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of Deutsche Boerse i.e., Deutsche Boerse and Nasdaq go up and down completely randomly.
Pair Corralation between Deutsche Boerse and Nasdaq
Assuming the 90 days horizon Deutsche Boerse AG is expected to generate 0.89 times more return on investment than Nasdaq. However, Deutsche Boerse AG is 1.12 times less risky than Nasdaq. It trades about 0.05 of its potential returns per unit of risk. Nasdaq Inc is currently generating about 0.04 per unit of risk. If you would invest 1,746 in Deutsche Boerse AG on August 27, 2024 and sell it today you would earn a total of 490.00 from holding Deutsche Boerse AG or generate 28.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Boerse AG vs. Nasdaq Inc
Performance |
| Timeline |
| Deutsche Boerse AG |
| Nasdaq Inc |
Deutsche Boerse and Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Boerse and Nasdaq
The main advantage of trading using opposite Deutsche Boerse and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Boerse position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq'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 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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