Correlation Between Deutsche Brse and SP Global

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Can any of the company-specific risk be diversified away by investing in both Deutsche Brse and SP Global 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 Brse and SP Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Brse AG and SP Global, you can compare the effects of market volatilities on Deutsche Brse and SP Global 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 Brse with a short position of SP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Brse and SP Global.

Diversification Opportunities for Deutsche Brse and SP Global

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Deutsche and SPGI is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Brse AG and SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Global and Deutsche Brse 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 Brse AG are associated (or correlated) with SP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Global has no effect on the direction of Deutsche Brse i.e., Deutsche Brse and SP Global go up and down completely randomly.

Pair Corralation between Deutsche Brse and SP Global

Assuming the 90 days horizon Deutsche Brse AG is expected to generate 1.07 times more return on investment than SP Global. However, Deutsche Brse is 1.07 times more volatile than SP Global. It trades about 0.08 of its potential returns per unit of risk. SP Global is currently generating about 0.06 per unit of risk. If you would invest  17,569  in Deutsche Brse AG on December 29, 2023 and sell it today you would earn a total of  2,731  from holding Deutsche Brse AG or generate 15.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Deutsche Brse AG  vs.  SP Global

 Performance 
       Timeline  
Deutsche Brse AG 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Deutsche Brse AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Deutsche Brse is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
SP Global 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days SP Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, SP Global is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Deutsche Brse and SP Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deutsche Brse and SP Global

The main advantage of trading using opposite Deutsche Brse and SP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Brse position performs unexpectedly, SP Global 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 SP Global will offset losses from the drop in SP Global's long position.
The idea behind Deutsche Brse AG and SP Global 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.
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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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