Correlation Between CME and Deutsche Brse
Can any of the company-specific risk be diversified away by investing in both CME 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 CME and Deutsche Brse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CME Group and Deutsche Brse AG, you can compare the effects of market volatilities on CME 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 CME with a short position of Deutsche Brse. Check out your portfolio center. Please also check ongoing floating volatility patterns of CME and Deutsche Brse.
Diversification Opportunities for CME and Deutsche Brse
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CME and Deutsche is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CME Group 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 CME 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 CME Group 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 CME i.e., CME and Deutsche Brse go up and down completely randomly.
Pair Corralation between CME and Deutsche Brse
Assuming the 90 days trading horizon CME is expected to generate 1.28 times less return on investment than Deutsche Brse. In addition to that, CME is 1.16 times more volatile than Deutsche Brse AG. It trades about 0.07 of its total potential returns per unit of risk. Deutsche Brse AG is currently generating about 0.1 per unit of volatility. If you would invest 15,845 in Deutsche Brse AG on September 12, 2024 and sell it today you would earn a total of 6,255 from holding Deutsche Brse AG or generate 39.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CME Group vs. Deutsche Brse AG
Performance |
| Timeline |
| CME Group |
| Deutsche Brse AG |
CME and Deutsche Brse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CME and Deutsche Brse
The main advantage of trading using opposite CME and Deutsche Brse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CME 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.The idea behind CME Group and Deutsche Brse AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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