Correlation Between Deutsche Boerse and Japan Exchange
Can any of the company-specific risk be diversified away by investing in both Deutsche Boerse and Japan Exchange 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 Japan Exchange 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 Japan Exchange Group, you can compare the effects of market volatilities on Deutsche Boerse and Japan Exchange 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 Japan Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Boerse and Japan Exchange.
Diversification Opportunities for Deutsche Boerse and Japan Exchange
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Deutsche and Japan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Boerse AG and Japan Exchange Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Exchange 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 Japan Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Exchange Group has no effect on the direction of Deutsche Boerse i.e., Deutsche Boerse and Japan Exchange go up and down completely randomly.
Pair Corralation between Deutsche Boerse and Japan Exchange
Assuming the 90 days horizon Deutsche Boerse AG is expected to generate 0.78 times more return on investment than Japan Exchange. However, Deutsche Boerse AG is 1.28 times less risky than Japan Exchange. It trades about -0.16 of its potential returns per unit of risk. Japan Exchange Group is currently generating about -0.27 per unit of risk. If you would invest 2,035 in Deutsche Boerse AG on January 26, 2024 and sell it today you would lose (105.00) from holding Deutsche Boerse AG or give up 5.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Boerse AG vs. Japan Exchange Group
Performance |
| Timeline |
| Deutsche Boerse AG |
| Japan Exchange Group |
Deutsche Boerse and Japan Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Boerse and Japan Exchange
The main advantage of trading using opposite Deutsche Boerse and Japan Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Boerse position performs unexpectedly, Japan Exchange 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 Japan Exchange will offset losses from the drop in Japan Exchange's long position.| Deutsche Boerse vs. TMX Group Limited | Deutsche Boerse vs. Otc Markets Group | Deutsche Boerse vs. Morningstar | Deutsche Boerse vs. CME Group |
| Japan Exchange vs. TMX Group Limited | Japan Exchange vs. Otc Markets Group | Japan Exchange vs. Morningstar | Japan Exchange 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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