Correlation Between Dow Jones and Deutsche Brse
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Deutsche Brse 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 Dow Jones and Deutsche Brse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Deutsche Brse AG, you can compare the effects of market volatilities on Dow Jones and Deutsche Brse 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 Dow Jones with a short position of Deutsche Brse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Deutsche Brse.
Diversification Opportunities for Dow Jones and Deutsche Brse
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Deutsche is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Deutsche Brse AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Brse AG and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Deutsche Brse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Brse AG has no effect on the direction of Dow Jones i.e., Dow Jones and Deutsche Brse go up and down completely randomly.
Pair Corralation between Dow Jones and Deutsche Brse
Assuming the 90 days trading horizon Dow Jones is expected to generate 8.83 times less return on investment than Deutsche Brse. But when comparing it to its historical volatility, Dow Jones Industrial is 1.8 times less risky than Deutsche Brse. It trades about 0.05 of its potential returns per unit of risk. Deutsche Brse AG is currently generating about 0.25 of returns per unit of risk over similar time horizon. 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 |
Dow Jones Industrial vs. Deutsche Brse AG
Performance |
| Timeline |
Dow Jones and Deutsche Brse Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Deutsche Brse AG
Pair trading matchups for Deutsche Brse
Pair Trading with Dow Jones and Deutsche Brse
The main advantage of trading using opposite Dow Jones and Deutsche Brse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Deutsche Brse 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 Deutsche Brse will offset losses from the drop in Deutsche Brse's long position.| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
| Deutsche Brse vs. CME Group | Deutsche Brse vs. Intercontinental Exchange | Deutsche Brse vs. Hong Kong Exchanges | Deutsche Brse vs. London Stock Exchange |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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