Correlation Between SP Global and Deutsche Brse

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

Diversification Opportunities for SP Global and Deutsche Brse

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between SPGI and Deutsche is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SP Global 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 SP Global 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 SP Global 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 SP Global i.e., SP Global and Deutsche Brse go up and down completely randomly.

Pair Corralation between SP Global and Deutsche Brse

Given the investment horizon of 90 days SP Global is expected to generate 0.68 times more return on investment than Deutsche Brse. However, SP Global is 1.47 times less risky than Deutsche Brse. It trades about -0.03 of its potential returns per unit of risk. Deutsche Brse AG is currently generating about -0.11 per unit of risk. If you would invest  42,784  in SP Global on December 29, 2023 and sell it today you would lose (239.00) from holding SP Global or give up 0.56% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SP Global  vs.  Deutsche Brse AG

 Performance 
       Timeline  
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 AG 

Risk-Adjusted Performance

0 of 100

 
Low
 
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 and Deutsche Brse Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SP Global and Deutsche Brse

The main advantage of trading using opposite SP Global and Deutsche Brse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Global 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 SP Global 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.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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