Correlation Between Euronext and Deutsche Brse
Can any of the company-specific risk be diversified away by investing in both Euronext 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 Euronext and Deutsche Brse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euronext NV and Deutsche Brse AG, you can compare the effects of market volatilities on Euronext 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 Euronext with a short position of Deutsche Brse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euronext and Deutsche Brse.
Diversification Opportunities for Euronext and Deutsche Brse
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Euronext and Deutsche is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Euronext NV 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 Euronext 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 Euronext NV 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 Euronext i.e., Euronext and Deutsche Brse go up and down completely randomly.
Pair Corralation between Euronext and Deutsche Brse
Assuming the 90 days trading horizon Euronext NV is expected to generate 1.62 times more return on investment than Deutsche Brse. However, Euronext is 1.62 times more volatile than Deutsche Brse AG. It trades about 0.16 of its potential returns per unit of risk. Deutsche Brse AG is currently generating about 0.12 per unit of risk. If you would invest 10,020 in Euronext NV on September 12, 2024 and sell it today you would earn a total of 640.00 from holding Euronext NV or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Euronext NV vs. Deutsche Brse AG
Performance |
| Timeline |
| Euronext NV |
| Deutsche Brse AG |
Euronext and Deutsche Brse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euronext and Deutsche Brse
The main advantage of trading using opposite Euronext and Deutsche Brse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronext 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.| Euronext vs. CME Group | Euronext vs. Intercontinental Exchange | Euronext vs. Hong Kong Exchanges | Euronext vs. London Stock Exchange |
| Deutsche Brse vs. PKSHA TECHNOLOGY INC | Deutsche Brse vs. Playtech plc | Deutsche Brse vs. BOS BETTER ONLINE | Deutsche Brse vs. NetSol Technologies |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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