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 ADR 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

0.75

Correlation Coefficient

DEUTSCHE BOERSE  CME

Poor diversification

The 3 months correlation between DEUTSCHE and CME is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding DEUTSCHE BOERSE ADR 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 ADR 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 trading horizon DEUTSCHE BOERSE ADR is expected to generate 0.96 times more return on investment than CME. However, DEUTSCHE BOERSE ADR is 1.04 times less risky than CME. It trades about 0.25 of its potential returns per unit of risk. CME Group is currently generating about 0.14 per unit of risk. If you would invest  2,120  in DEUTSCHE BOERSE ADR on September 27, 2024 and sell it today you would earn a total of  100.00  from holding DEUTSCHE BOERSE ADR or generate 4.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

DEUTSCHE BOERSE ADR  vs.  CME Group

DEUTSCHE BOERSE ADR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DEUTSCHE BOERSE ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, DEUTSCHE BOERSE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CME Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CME Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CME reported solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind DEUTSCHE BOERSE ADR and CME 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..