Correlation Between Deutsche Brse and MSCI

Can any of the company-specific risk be diversified away by investing in both Deutsche Brse and MSCI 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 Brse and MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Deutsche Brse AG and MSCI Inc, you can compare the effects of market volatilities on Deutsche Brse and MSCI 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 Brse with a short position of MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Brse and MSCI.

Diversification Opportunities for Deutsche Brse and MSCI

0.22

Correlation Coefficient

Deutsche Brse  MSCI

Modest diversification

The 3 months correlation between Deutsche and MSCI is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Brse AG and MSCI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI Inc and Deutsche Brse 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 Brse AG are associated (or correlated) with MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI Inc has no effect on the direction of Deutsche Brse i.e., Deutsche Brse and MSCI go up and down completely randomly.

Pair Corralation between Deutsche Brse and MSCI

Assuming the 90 days horizon Deutsche Brse AG is expected to generate 2.23 times more return on investment than MSCI. However, Deutsche Brse is 2.23 times more volatile than MSCI Inc. It trades about 0.12 of its potential returns per unit of risk. MSCI Inc is currently generating about 0.13 per unit of risk. If you would invest  22,724  in Deutsche Brse AG on September 19, 2024 and sell it today you would earn a total of  1,268  from holding Deutsche Brse AG or generate 5.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Deutsche Brse AG  vs.  MSCI Inc

Deutsche Brse AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Brse AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Deutsche Brse may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MSCI Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MSCI Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Deutsche Brse and MSCI

The main advantage of trading using opposite Deutsche Brse and MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Brse position performs unexpectedly, MSCI 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 MSCI will offset losses from the drop in MSCI's long position.

The idea behind Deutsche Brse AG and MSCI Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.