Correlation Between Deutsche Boerse and CME
Can any of the company-specific risk be diversified away by investing in both Deutsche Boerse and CME 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 CME 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 CME Group, you can compare the effects of market volatilities on Deutsche Boerse and CME 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 CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Boerse and CME.
Diversification Opportunities for Deutsche Boerse and CME
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deutsche and CME is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Boerse AG and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group 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 CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of Deutsche Boerse i.e., Deutsche Boerse and CME go up and down completely randomly.
Pair Corralation between Deutsche Boerse and CME
Assuming the 90 days horizon Deutsche Boerse AG is expected to under-perform the CME. In addition to that, Deutsche Boerse is 1.31 times more volatile than CME Group. It trades about -0.16 of its total potential returns per unit of risk. CME Group is currently generating about 0.0 per unit of volatility. If you would invest 21,288 in CME Group on January 26, 2024 and sell it today you would lose (29.00) from holding CME Group or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Boerse AG vs. CME Group
Performance |
| Timeline |
| Deutsche Boerse AG |
| CME Group |
Deutsche Boerse and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Boerse and CME
The main advantage of trading using opposite Deutsche Boerse and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Boerse position performs unexpectedly, CME 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 CME will offset losses from the drop in CME's long position.| Deutsche Boerse vs. TMX Group Limited | Deutsche Boerse vs. Otc Markets Group | Deutsche Boerse vs. Morningstar | Deutsche Boerse vs. CME Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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