Correlation Between Deutsche Boerse and Macquarie Group

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Can any of the company-specific risk be diversified away by investing in both Deutsche Boerse and Macquarie Group 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 Macquarie Group 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 Macquarie Group, you can compare the effects of market volatilities on Deutsche Boerse and Macquarie Group 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 Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Boerse and Macquarie Group.

Diversification Opportunities for Deutsche Boerse and Macquarie Group

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Deutsche and Macquarie is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Boerse AG and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie 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 Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Deutsche Boerse i.e., Deutsche Boerse and Macquarie Group go up and down completely randomly.

Pair Corralation between Deutsche Boerse and Macquarie Group

Assuming the 90 days horizon Deutsche Boerse AG is expected to under-perform the Macquarie Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Deutsche Boerse AG is 1.3 times less risky than Macquarie Group. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Macquarie Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,984  in Macquarie Group on December 29, 2023 and sell it today you would earn a total of  68.00  from holding Macquarie Group or generate 0.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Deutsche Boerse AG  vs.  Macquarie Group Ltd

 Performance 
       Timeline  
Deutsche Boerse AG 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Deutsche Boerse AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Deutsche Boerse is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Macquarie Group 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Macquarie Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Deutsche Boerse and Macquarie Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deutsche Boerse and Macquarie Group

The main advantage of trading using opposite Deutsche Boerse and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Boerse position performs unexpectedly, Macquarie Group 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 Macquarie Group will offset losses from the drop in Macquarie Group's long position.
The idea behind Deutsche Boerse AG and Macquarie Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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